The Indonesian Fintech Lenders Association (AFPI) has partnered with the Financial Services Authority (OJK) to open on Monday a Fintech Data Centre (FDC), which will enhance credit assessment on loan distribution to prevent the rise of non-performing loans.
Currently, 15 peer-to-peer lending (P2P) companies registered with AFPI have provided their data to the center, while the other 129 fintech lending firms will integrate its data to the platform by the end of November, as requested by the association, said Adrian Gunadi, chairman of AFPI.
When the FDC will be entirely functional, by the end of the month, said Gunadi, P2P firms will be able to exchange other companies’ data, such as debtor’s identity cards and tax identification numbers.
“Through a fintech data center, fintech lenders will be able to understand the condition of borrowers or candidates and decide whether the loans could be distributed or not. Hence, it will help to prevent the risk of credit default,” Gunadi said in a press conference.
Gunadi guaranteed that the user’s data privacy will not fall into the wrong hands. Therefore, only a specialized team from AFPI and the OJK will have the authority to access and verify the data.
Lending platforms will be required to verify and check the data if there is a candidate applying for a loan, to assess the characteristics of the debtor candidate, and to know whether the applicant has an existing loan in other lending platforms.
Gunadi further explained that the center’s purpose will be different from a conventional credit scoring system. “A credit scoring gives ratings to debtors. FDC does not, it is more as the proxy of the debtors’ condition. If the debtor has bad collectibility, then other fintech lenders can reject [the loan application].”
Total funding from P2P platforms reached IDR 60.41 trillion (USD 4.3 billion) with more than 14 million borrowers as per September, from over 120 fintech companies listed with the OJK, according to data from Bank Indonesia.
Since 2018, reports about illegal fintech and non-performing loans have risen. For instance, one individual could borrow more than 100 times from different lender platforms, according to AFPI data.