Why Indonesian Peer-to-Peer Lending Market is projected for exponential growth?


Diving into the heart of financial innovation, this whitepaper unveils the captivating narrative: Why is the Indonesian Peer-to-Peer Lending Market primed for unparalleled growth? What enigmatic factors fuel this upward trajectory, defying conventional norms? Can the dynamic blend of technology and lending truly reshape Indonesia's financial landscape?
Explore these compelling questions and embark on a journey through data-driven insights, groundbreaking trends, and the power of untapped potential. Join us as we decode the forces driving exponential expansion and reveal the alluring promises this market holds.

1. As the world’s fourth most populous country, and with around 70 percent of its people representing working age, Indonesia has unique economic potential when it comes to money and capital

Indonesia: Key Facts1

Total Population, 2022
275.5 Mn
Per Capita Income, 2022
IDR 71 Mn
Working Age Population

Indonesia GDP and Inflation Rate (%), 2017-20222

Population by Gender, 20221

Indonesia Major Cities

Population by Age Group, 20221

Age Group Population, 2022
0-14 ~66.1 Mn (24.0%)
15-29 ~67.1 Mn (24.3%)
30-49 ~82.3 Mn (29.9%)
50-64 ~41.5 Mn (15.1%)
64+ ~18.6 Mn (6.7%)

Urban and Rural Population, 2022

1. Central Statistics Agency (BPS) 2. Statista
Source: Interviews conducted with Industry Experts, Industry Articles & Ken Research Analysis

2. Indonesia is home to over 64 million MSMEs, accounts for almost 60% of the national gross domestic product (GDP), and absorbs a whopping 97% of the workforce 

Indonesia MSME Landscape

Number of MSMEs, 20211
~64 Mn
Contribution to GDP1:

These enterprises contribute 61% or IDR 8.57,400 trillion to the nation’s GDP


MSMEs provide employment for 97% of the nation’s total workforce – around 117 Mn workers

Major sectors:

Wholesale and retail trade

Agriculture, forestry, and fisheries

Transportation and communication


Growth Drivers:

Infrastructure Development

Rise of e-commerce

Technology Adoption

Government Support

MSME needs and their importance

Access to Finance

Access to Markets

Business Support Services

MSME Definition2

Micro Small Medium
Net assets (land and building excluded) Less than 50 Mn IDR 50 Mn IDR–500 Mn IDR 500 Mn IDR–10 Bn IDR
Total annual sales value Less than 300 Mn IDR 300.0 Mn IDR–2.5 Bn IDR 2.5 Bn IDR to 50.0 Bn IDR
Employment 1-4 people 5-19 people 20-99 people
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3. Peer-to-peer (P2P) platforms act as marketplaces bringing together borrowers and lenders/investors, offering quick, low-cost, technology-driven solutions particularly beneficial for the growing MSME segment

The Definition of Peer-to-Peer Lending (P2P Lending)

  • P2P lending (peer-to-peer lending) is a type of platform that allows participants to borrow and lend sums of money without having to rely on a conventional financial institution to control transactions.
  • Also known as crowdlending or social lending, such a system connects borrowers and lenders directly, usually through a website or an app.

Benefits of Peer-to-Peer Lending

To the Borrower:
  • P2P lending allows borrowers to apply for loans online and receive funds quickly, often within a few days.
    Flexible Terms
  • P2P loans offer greater flexibility in terms of choosing the tenure of the loan, the repayment schedule, shorter repayment periods, lower interest rates, etc.
    Access to Funding
  • P2P lending platforms can provide access to funding for borrowers who might not qualify for traditional loans due to a lack of credit history, collateral, or other factors. 
To the Lender:
    Transparency and Control
  • Investors can view detailed information about the borrowers and their creditworthiness, assess the risk and return of each loan, and decide how much to invest and at what interest rate.
    High Returns
  • P2P lending platforms offer higher returns than traditional investments, such as savings accounts or bonds. This can be a great way for lenders to earn passive income.
  • P2P lending allows to spread investments across a number of different borrowers, reducing the risk of losing all the money if one borrower defaults.
Source: Interviews conducted with Industry Experts, Industry Articles & Ken Research Analysis

4. Since the inception of P2P Lending in Indonesia, its market saw remarkable growth, with driving factors such as the digital revolution, public interest in new financial technologies & a huge potential industry

Waves of Change in P2P Lending Market


I: Emerging Phase >2016

  • The P2P lending market in Indonesia started to emerge in 2014 with the establishment of several startups which mainly focused on providing microcredit to SMEs and individuals who were underserved by traditional financial institutions.
  • These platforms operated on an informal basis, with transactions often conducted through social media or other informal channels and interest rates were often very high
  • With lack of a regulatory framework, there were concerns about the risks and potential for fraud in the market.

II: Growing Phase 2016 - 2030

  • The Introduction of regulations by OJK (OJK Reg. 77/2016) led to increased credibility and legitimacy for P2P lending platforms, which attracted more players to enter the industry and led to increased acceptance.
  • This also led to emergence of illegal platforms and hence, strengthened financial safeguards to boost consumer protection.
  • Platforms focus on expansion to their operations by offering loans to a wider range of borrowers, introducing new loan products, and partnering with other financial institutions to offer more comprehensive financial services.

III: Maturity Phase 2030<

  • The market will arrive at a core group of strong operators (reduction in number of players with stricter regulations) that have the credibility and capacity to provide P2P services in a scrupulous and conscientious manner.
  • As players become more established and gain a deeper understanding of their customers, they are likely to expand their offerings beyond traditional loans. This could include offering new financial products such as insurance, investment, and savings products.

Market Growth

  • Growth Stage
  • ~142% CAGR on the basis of Loan Disbursed (2017-2022)

Market Nature

  • Moderately Fragmented Market with presence of 102 P2P Platforms but few players accounting for majority share (top 5 players account for approximately 20% of the market)
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5. Increased demands from SMEs, Partnerships with Commercial Banks, Large Unbanked Population were some of the underlying reasons driving the growth of Indonesia’s P2P Lending Market

Growth Drivers in Indonesia P2P Lending Market


  • Indonesia is Southeast Asia’s largest economy with a population of more than 273 million people. With a large youth population, burgeoning mobile phone and Internet penetration, Indonesia presents a unique reserve of untapped fintech opportunities.

    Demand from SMEs

  • Within the unbanked segment, AFTECH reports that there are close to 49 million underbanked SMEs, further extending Indonesia’s financial inclusion challenge to individuals and small businesses that are struggling to get loans at reasonable rates from commercial banks, therefore shifting their needs towards P2P Lenders.

    Massive opportunity for P2P Lenders

  • According to World Bank, more than 90 million+ in Indonesia remain unbanked, leaving opportunity for lending platforms to attract customers by offering low interest rates.

    Partnership with Commercial Banks

  • OJK acknowledges that banks were wary in the early P2P lending stages, but with increasing regulations, large banks are significantly more inclined to partner with these platforms. Bank Mandiri, amongst many others, acknowledged that it was a lot more difficult to economically reach the unbanked before the help of their P2P lending partners, Amartha and KoinWorks.
Source: Interviews conducted with Industry Experts, Industry Articles & Ken Research Analysis

6. Moreover, with the latest trends such as Digitization, the Introduction of eKYC and Chatbots via AI, the Indonesian P2P lending industry is ready for exponential growth by the end of this decade



Most local platforms are not yet fully digitized, which is a deterrent for lenders who are looking for a seamless investment experience.


Risk Management

P2P platforms are focusing on to strengthen their risk management over credit assessment, compliance, and operational procedures through dedicated teams.


eKYC through AI

By entering the necessary policies and having it recognize the platform’s borrower assessment patterns, machine learning is transforming and refining the entire credit approval process.


Institutional Finance Partnerships

Institutional finance (Banks) is finding ways within the existing regulatory framework to penetrate the market lending segment by working alongside P2P lending platforms.



Platforms are using Chatbots to improve overall customer experience and platform loyalty by taking in the questions and feedback from customers and generate appropriate answers / best practices.

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