How Personal Loan Has Become Grown Up Phenomenon in Indonesia?

To encourage economic growth, Indonesia has made significant changes to its regulatory framework to attract foreign investment.  After the industrial and financial sector reforms of the 1980s, the sectors from oil and gas, mining, banks, and manufacturing are the most interested in foreign investments from the US, China, India, Japan, the UK, Singapore, the Netherlands, Qatar, and South Korea.

Foreign investors contributing to Indonesia’s economy

Economic growth is resilient, government debt is low, and fiscal management is prudent, contributing to the upgrade and attracting portfolio flows and foreign direct investment into Indonesia.

Indonesia’s growing middle class and competitive workforce have attracted more foreign investors than ever to the country’s robust manufacturing sector.

Recent upgrades of Indonesia’s credit ratings by international financial services companies, including Standard & Poor’s, Fitch Ratings, and Moody’s are another important sign of international recognition of its economy.

Despite this, the sector continues to face significant challenges, including fierce international competition, increasing labour costs, high transportation, and logistics costs, difficulties getting credit, and varying levels of transparency.

Stronger Financial loan growth in 2021

Indonesia’s high population and growing economy contribute to the growth of personal loans. A survey conducted by Bank Indonesia showed faster growth of bank loans in the first quarter of 2021 amid the pandemic with the weighted net balance increasing to 49.4% from 25.4% in the fourth quarter of 2020.

The National Economic Recovery Program took steps to help businesses and vulnerable households. To ensure economic stability in the market, the central bank purchased the government bonds in the primary market keeping in mind the low public debt ratio and ongoing economic recovery, the medium termed fiscal strategy was admired. The government also introduced large-scale loan restructuring programs and interest subsidies to the most affected sectors.

Financial flexibility and access to credit

Indonesia’s increasing income and wealth, looseness, and flexibility of financial policy contribute to the growth of personal loans. Loan growth in Indonesia is expected to be 3.02% by the end of this quarter and will reach 5.00% in 2023 and 11.00 % in 2024 according to Trading Economics global macro models and analysts expectations. According to Bank Indonesia, the value of loans in Indonesia increased by 10.66% in June of 2022.

Microfinancing is an initiative that is taken by the government that involves the provision of small, low-interest loans to individuals and groups with low incomes. As a result of poverty, customers without access to traditional financial services are provided with banking services through microfinance. Indonesia has almost 200 multi-finance companies which are licensed to offer leasing, consumer financing, credit card financing, and other lending services.

Regulations and enforcement of loan contracts

As part of its efforts to mitigate the ongoing impact of the pandemic on the Indonesian economy, the Indonesian Government issued a number of extraordinary financial policies and measures. Lending personal loans have made life easier for the common masses who used to face cash crunches now and then. It not only helps them in emergencies to meet their requirements but also helps them to meet their wants.

A new technology that automates and improves financial services delivery has shown up that is known as Fintech companies. A bank, however, refers to a financial institution that accepts deposits from customers and makes loans.

A total of 167 Fintech companies operate in Indonesia, offering services such as payment, lending, personal finance, crypto and blockchain, crowdfunding, insurtech, and point-of-sale. The OJK’s list dated 3 January 2022 shows that more than 100 fintech lending companies exist, all of which are licensed. 

Importance of digital advertising for personal loan business

Online marketing is an important aspect of the personal loan business. Brands can attract more potential users through digital mediums and convincing ads as a majority of the population are busy on their phones nowadays. Banks utilize personalization, customer experience, customer outreach, and audience segmentation as part of their digital marketing strategy to improve the quality of their advertising.

In order to increase return on investment, brands need to generate more sales and revenues or raise their prices. Reaching the right audience and gaining a positive return from advertising is important to assess if the marketing and advertising strategy success.

About MOCA Technology

MOCA is the largest OEM consolidator globally and an advertising innovator to help advertisers to make innovative formats & combinations for contextualized promotion. MOCA wants to be the most trusted and reliable partner for marketers to provide one-stop service in improving efficiency and effective communications across all OEMs and top publishers, to help them to reach their target audience and to be the top-of-mind brand.