This study aims to identify the opportunities and challenges facing the P2P lending industry in Indonesia,with regards to the gaps in the market created by lack of financial access to banks,as well as risks that arise from such opportunities.The study does partly by examining the factors that affect default rates.The significant risk identified across many countries and especially in Indonesia is the default,which can have tremendous effects across the whole ecosystem.The most significant effect is the losses incurred by FinTech’s and eventual systemic exit of creditors,which creates a situation where there is lack of access to credit.Loan default is a crucial topic of discussion that has to involve the understanding of consumers,their borrowing patterns,payment,and aspects that affect the payment capabilities.Without assessing defaulter characteristics and default rates,the risk assessment of P2P lending would not be complete.
　　The data used in this study was obtained from various sources,including statista.com and the Indonesia Financial Services Authority,also referred to as Otoritas Jasa Keuangan.The data used in this study focused on the averages from P2P platforms in Indonesia,and the data spans between2015and2019.Most of the data is quarterly data and the data utilized was not from a single P2P platform,but from various platforms arrived at after obtaining average data.To address and achieve all the research objectives,an examination of previous studies on the opportunities,risks,and solutions to the risks was also carried out.The dependent variable in this study was the default rate of fintech loans.This was the proxy for the risk of fintech in Indonesia.The independent variables included the fintech interest rate,the income levels of the borrowers,the average loan amounts,and the average age of the borrowers.The analysis in this concludes that there exists a significant defaulting risk of FinTech loans in Indonesian P2P lending platforms,and that FinTech Loan interest rate significantly impacts the default rate of FinTech loans and that a person’s age affects their default rate of FinTech loans.However,it is also established that loan amounts(the amounts borrowed)and the incomes of the borrowers do not significantly impact the default rates of a FinTech loan.The future potential of P2P lending in Indonesia is great as the analyses in the study have demonstrated.The evolution of P2P lending in Indonesia has been unique and critical to the market.The presences of systems that can reach unbanked individuals increase the chances of more credit reaching people and businesses.The mobile platform and internet technology have been the most crucial aspects that have supported P2P lending.