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RESEARCH PROPOSAL

Fintech in Indonesia: Perception and Factors Influencing the


Perception by Millenials Generation

Ferdyana Lie (1700000581)

Mulyo Susanto (1700000064)

MM Young Professional Creative Marketing

Binus Business School


Title:
FinTech in Indonesia: Perception and Factors Influencing the Perception by
Millennials Generation

Chapter 1
1.1 Introduction

Financial Technology (FinTech), representing the marriage between financial


and information technology, is one of the fastest growing global business. PWC defines
FinTech as the intersection between financial services and emerging technology,
converging in a way that impacts infrastructure and operations for existing and evolving
business models. Examples include peer-to-peer payment technology and clearing and
settlement solutions such as blockchain, which result in better, more customer-focused
solutions at lower costs1. KPMG defines FinTech as technology-based businesses that
compete against, enable, and/or collaborate with financial institutions. This ranges from
creating software to processes that enable financial institutions to enhance their customers
experience and streamline their operations, or enable customers to fulfill their financial
needs (savings, investment, make payments)2. The FinTech is disrupting the banking
sector, the undoubtly important to the daily lives of people.

According to Accenture, the global investment in FinTech companies in the first


quarter of 2016 reached USD 5.3 billion, which is a 67% increase over the same period last
year3. In the last two decades, Indonesias financial industry also shifted due to the fast
technology and development. The Indonesias FinTech Association (IFA), established in
2015, was able to map more than 120 FinTech players as of 2016 and the number is
continuously growing. The disclosed amount of FinTech funding in Indonesia in 2016
reach around IDR 486.3 billion (USD 35 million). Some example of a well-known FinTech


1
https://www.pwc.com/us/en/financial-services/fintech.html
2
http://www.ryerson.ca/career/specialevents/fintech/
3
https://newsroom.accenture.com/news/global-fintech-investment-growth-continues-in-2016-driven-by-
europe-and-asia-accenture-study-finds.htm
companies in Indonesia are, Crowdo, Investree (Lending) Bareksa, DuitPintar.com
(Aggregator), Go-Pay, Doku (Payment), and Kitabisa.com, Ethis (Crowdfunding).

Even though with the past pace of the digitalization with 132.7 million internet
users Indonesia, FinTech already have a strong infrastructure to grow in Indonesia, it is not
simultaneously in line with its awareness and adoption. A survey conducted by DailySocial
with majority of respondents of millennial generation (43.34%) stated that 71.66% of the
respondent think that FinTech is an unknown word and only 18.46% respondents said
they already used a FinTech service. And for those who knows the term, its meaning is
ambiguous, could be because of the novelty and tremendous rapid rise of the FinTech
industry. We argue that exploring the terms FinTech in millennial generation will aid the
practitioners of FinTech in identifying the opportunities and challenges related to the
phenomenon and ultimately be able to create the effective marketing strategy.

However, while generous amount of research addresses the field of financial


institutions and/or banking sector, only a few have touched the FinTech industry, especially
in Indonesia. The context of FinTech itself is very broad and continuously evolving from
time to time and reinvent the banking industry. Thus, the need to understand the point of
view from millennials generation, the FinTechs target market, is the motivation for the
exploration on how FinTech is perceived and the factors influencing the perception.

1.2 Statement of Problem


The qualitative study will explore how FinTech is perceived and the factors
influencing the perception by millennials generation to create a better and more effective
marketing strategy because now the term is still ambiguous.

1.3 Research Questions


To address the statement of problem, we focus on two aspects to guide through the
analysis:
1. How is the term FinTech perceived by millennials generation in Indonesia?
2. What are the factors influencing their perception?
Chapter 2

2.1 Theory
2.1.1 Financial Technology

The growth of technology adoption has thrived globally and influenced Indonesia
as a developing country to see this as a job opportunity. E-commerce has grown very
rapidly in Indonesia and now the rise of Fintech (Financial Technology) is following its
succeed.

Ranging from new digital payment systems and digital or electronic currencies to
online investment/finance platforms and data analytics, these developments, collectively
called FinTech, are already having an impact on traditional financial markets and services
(Brummer & Gorfine 2014). Financial Technologies (FinTechs) are a global phenomenon,
born at the intersection between financial firms and technology providers, attempting to
leverage on digital technology and advanced analytics to unbundle financial services and
harness economies of scale by targeting long-tail consumers (Sironi, 2016).

Moreover, Bank of Indonesia defines Fintech as A phenomenon of fusion between


technology and financial features that transform business models and a weak barrier to
entry which lead to raises unregulated players to run the service as well as regulated
financial institutions (Dailysocial.id)[pdf slides]. By November 2016, there are more than
135 has listed by Indonesia Fintech Association (IFA) in Indonesia (Dailysocial.id)[pdf
slides]. Same on that time, 55 fintech players registered as a full member of association
(Dailysocial.id)[pdf slides].

2.1.2 Classify of Financial Technology

Like other digital services, FinTechs have different classifications. The financial
services offered by FinTechs depend on the specific segment focus (payment, trading,
mortgage lending and personal finance management) (Caria, 2017, pp1).
Furthermore, Brummer & Gorfie stated that, for current purposes, FinTechs are
including:
1. Digital and electronic currencies: there are more than 200 digital currencies
(independent, non-fiat currencies) in existence, 12 of which have market
capitalizations of greater than $5million. From bitcoin to litecoin, digital currencies
are driving financial disintermediation and offering new peer-to-peer channels for
routing payments, even for international remittances.
2. Digital payment systems: Along with the peer-to-peer models noted above, digital
payment systems continue to evolve and transform the way consumers and
businesses interact.
3. Online finance and investment platforms: Online finance and investment platforms
are increasingly challenging the providers of traditional financial services with
efficient, low-cost, and user-friendly products and platforms. Companies such as
Wealthfront, Betterment, and Acorns, for example, are creating automated financial
advisory platforms targeting millennials in a new approach to wealth management.
4. Big data analytics: Massive data aggregation and analytics are increasingly
allowing financial platforms and service providers to offer innovative and low-cost
products and services. Proprietary credit risk models, for example, have
dramatically reduced the amount of time individuals and small businesses have to
wait to access credit, and have expanded the range of potential peer-to-peer
investment opportunities, including through Lending Club and Prosper.
2.1.2.2 Financial Technology Product

Source: E&Y Journal of Financial Perspectives: Fintech, 2015

2.1.3 Millennial

The digital era is related to Millennial-Generation or most people known as Gen Y.


Millennial-Generation or Generation Y, born 1982-2003. (Sandeen, 2008) [pdf slides].

Like Generation X, millennials grew up with computers; they also experienced the
rapid adoption of the Internet, cell phone, and other mobile devices. They are a highly
networked, connected generation and tend to be completely immersed in technology
(Sandeen, 2008) [pdf slides].

2.1.4 Perception

Self-perception theory predicts that a new attitude will emerge if an individual


performs a behavior, which is more extreme than is implied by his attitude. It is not
necessary for the behavior to be attitude-discrepant (Fazio, Zana, Cooper, 1976).
Self-perception theory leads to the expectation that attitude change will occur if the behavioral advocacy lies anywhere
along the attitudinal continuum other than the persons preferred position. (Fazio et al 1976).

2.2 Related Journal

No Title Analysis Unit Variabel Approach Sampling Analysis Result Advice


Technique
The Adoption of Engineers of Brand and Quantitative 550 copies of Korelasi Customer satisfaction, 1. Induct other
Fintech Service: manufacturing service trust questionnaire efficiency, industries as
1 TAM industries Perceived and 440 valid conveniency, quickly sampling frame.
Perspective usefulness copies were and friendliness of the 2. Focus on
Perceived collected Fintech Service are examination of the
ease of use affecting customers effects of other
Attitude attitude. The degree of factors such as social
Behavioral positive and negative norms and
Intention evaluation of situational variables
customers in using moderated by the
Fintech service is the relationship between
most important factor attitude and
that affects customer. behavorial intention
2 The Relationship College students Attitude, Quantitative 220 copies Regresi Complexity was shown 1. Securing external
between Attitude and office workers satisfaction collected to statistically non- validity with
and Satisfaction in South Korea and continue exluding biased significant to attitude. research design
for Improving user intention distribution via Due to lack of considering such
Continue User Mail and infrastructure and factors
Intention in personal visit perception, it seems 2. Need to study
Fintech that more active cases by Fintech
advertisement and business type
security provision is
needed.
3. The main factor of
Fintech service
invigoration is security
3 A Review of Research papers Technology Literature Purposive Present an provides an overview May require that
Evolution of with relevant adoption, Review sampling overview of of theories and models existing theories are
Theories and keywords (such as technology technology which have evolved augmented with
Models of technology adoption over the years for constructs from
Technology adoption, theory, better understanding of other disciplines of
Adoption technology technology adoption process of management in
adoption theory, adoption technologies by order to explain the
technology model individuals and adoption process of
adoption model, organizations. new technologies.
etc)
4 The FinTech English and Financial Qualitative Purposive Discourse Unveiling the potential Complement the
phenomenon: German Press, Innovation sampling analysis of FinTech and research with similar
antecedents of Entrepreneurs, providing practical study targeting and
financial investors, Popular press applications of IS exploring Asian
innovation regulators, etc research country and
perceived by the identifying the most
popular press prominent related
subjects and, as
comparison finding
the differences and
similarities in
FinTech.
5 A Review of Research papers Technology Literature Purposive Present an provides an overview May require that
Evolution of with relevant adoption, Review sampling overview of of theories and models existing theories are
Theories and keywords (such as technology technology which have evolved augmented with
Models of technology adoption over the years for constructs from
Technology adoption, theory, better understanding of other disciplines of
Adoption technology technology adoption process of management in
adoption theory, adoption technologies by order to explain the
technology model individuals and adoption process of
adoption model, organizations. new technologies.
etc)
Chapter 3

3.1 Research Object


The qualitative research will be done in order to meet the result. Researchers want
to know the perception of Indonesian millennial in seeing the FinTech phenomenon as well
as the awareness of Indonesian millennial regarding the FinTech products that exist in
Indonesia.

3.2 Sources
Our target is millennial or Gen-X in Indonesia that have used or have not used
FinTech products. Researcher need to gain information from millennial perception of
FinTech information.

3.3 Methodology
Because the perception is complex and need deep understanding, the researchers
feel that qualitative method is a powerful tool to explore those complexities (Clifton and
Handy, 2001), since they allow a grasp of the individuals own explanations of behavior
and attitudes. Qualitative method also produces an in-depth understanding (Cooper and
Schindler, 2008).

The primary means of the data collection is the Focus Group Discussion. The term
focus group was first coined by R. K. Merton in his 1056 book, The Focused Interview.
The focus group is a panel of people (typically made up to 6 to 10 participants), led by a
trained moderator, who meet for 90 minutes to two hours. The facilitator or moderator uses
group dynamics principles to focus or guide the group in an exchange of ideas, feelings,
and experiences on a specific topic (Cooper and Schindler, 2008).

3.4 Data Collection Method


We are obtaining the data from primary resources. Primary data refer to information
obtained first-hand by the researcher on the variables of interest for the specific purpose of
the study (Bougie and Sekaran, 2009).
Focus group questions were developed by the research team and need to be
pretested to ensure that the questions are understood by the respondents (i.e. there is no
ambiguity in the questions and that there are no problems with the wording or
measurement (Bougie and Sekaran, 2009). We use some semi-structured questions to
manage consistency but in the same time provide flexibility across the group. The issue
that will be covered including participants overall perception of FinTech and the factors
influencing the perception. The interviews will particularly address the two major
categories of FinTech which is Payment and Lending. It will be opened with open-ended
questions to get a broad idea and form some impressions about the situation (Bougie and
Sekaran, 2009).

In order to gain more background information of the participants, they will be asked
to fill out a questionnaire before the start of the session comprises of their personal data,
bankability, and financial behavior.

3.5 Data Analysis Method


The discussion will be taped and transcribed verbatim by the researchers. As
suggested by Bougie and Sekaran (2009), qualitative data collection produces large
amounts of data, so the first step in data analysis is therefore the reduction of data through
coding and categorization. Next, we start to divide the data into distinctive meaning units
(cf. Rennie, Phillips, and Quartaro, 1988; Wertz, 1983). Meaning units are usually parts of
the data that even if standing out of the context, would communicate sufficient information
to provide a piece of meaning to the reader. As we delineate the meaning units, we can
shorten them by getting rid of redundancies that do not change the meaning contained in
them (Elliott and Timulak, 2005).

After coding and categorization, we will find for the patterns that repetitively occur
within the transcripts. A technique used to increase confidence in the results was the use
of credibility checks (Willig, 2001) within the research team, to see whether the analysis
and interpretation of the data was credible.
List of References/Bibliography

Accenture. 2016. Global Fintech Investment Growth Continues in 2016 Driven by Europe
and Asia, Accenture Study Finds. https://newsroom.accenture.com/news/global-
fintech-investment-growth-continues-in-2016-driven-by-europe-and-asia-
accenture-study-finds.htm (23 Oktober 2017)
Bougie, Roger and Sekaran, Uma. 2009. Research Methods for Business: A Skill-Bulding
Approach. United Kingdom: John Wiley & Sons Ltd.
Brummer, C., Gorfine, D., 2014. FinTech: Building a 21st-Century Regulators Toolkit,
October 2014 (pp. 2-4). Center for Financial Markets: Milken Institute.
Caria, P., 2017. FinTech: an explorative study into the characteristic of their business
model. Working Paper.
Carlin, B., Olafsson, A., Pagel, M., 2017. FinTech Adoption Across Generations: financial
fitness in the information age. NBER Working Paper Series.
Chen, David Lee Kuo and Ernie GS Teo, 2015. Emergence of FinTech and the LASIC
principles, E&Y Journal of Financial Perspectives: FinTech. [online] Available at:
<https://www.gfsi.ey.com/the-journal-of-financial-perspectives.php> [Accessed
22 October 2017].
Clifton, K.J., Handy, S.L., 2001. Qualitative methods in travel behavior research. Paper
presented at the International Conference on Transport Survey Quality and
Innovation, Kruger National Park, South Africa.
Cooper, Daniel R. and Schindler, Pamela S., 2008. Business Research Methods. New York,
NY: The McGraw-Hill Companies, Inc.
DailySocial. 2016. Indonesia Fintech Report 2016. Jakarta: DailySocial.
Fazio. R., Zana. M., Cooper, J., 1976. Dissonance and Self-perception: An Integrative View
of Each Theorys Proper Domain of Application.
Miles, Jeremy and Gilbert, Paul. 2005. A Handbook of Research Methods for Clinical and
Health Psychology. Tucson, AZ: Oxford University Press.
Raneri, Mike. 2017. FinTech: Operating at The Intersection Between Financial Services
and Emerging Technology. https://www.pwc.com/us/en/financial-
services/fintech.html. (Accessed on: 23 October 2017)
Rennie, D.L., Phillips, J.R., & Quartaro, G.K, 1988. Grounded theory: A promising
approach to conceptualization in psychology? Canadian Psychology, 29, 139-150.
Sandeen, C., 2008. Boomers, Xers, and Millenials: Who are They and What Do They Really
Want from Continuing Higher Education? Los Angeles: University of California.
Sironi, P, 2016. FinTech Innovation. From Robo-Advisor to Goal Based Investing and
Gamification. UK: John Wiley & Sons, Ltd.
Willig, Carla, 2001. Introducing qualitative research in psychology. England: Open
University Press.
Zavolokina. L., Dolata. M., Schwabe. G., 2016. The FinTech phenomenon: antecedents of
Financial innovation perceived by the popular press. Zurich: University of Zurich.
Chen, David Lee Kuo and Ernie GS Teo, 2015. Emergence of FinTech and the LASIC
principles, E&Y Journal of Financial Perspectives: FinTech. [online] Available at:
<https://www.gfsi.ey.com/the-journal-of-financial-perspectives.php> [Accessed 22 October
2017].

List of References / Bibliography

Accenture. 2016. Global Fintech Investment Growth Continues in 2016 Driven by Europe and
Asia, Accenture Study Finds. https://newsroom.accenture.com/news/global-fintech-investment-
growth-continues-in-2016-driven-by-europe-and-asia-accenture-study-finds.htm (23 Oktober
2017)
DailySocial. 2016. Indonesia Fintech Report 2016. Jakarta: DailySocial.
Raneri, Mike. 2017. FinTech: Operating at The Intersection Between Financial Services and
Emerging Technology. https://www.pwc.com/us/en/financial-services/fintech.html. (23 October
2017)