Educated People Also Fall Victim to Illegal Fintechs, Investments: OJK

TEMPO.CO, Jakarta - A member of the Financial Services Authority (OJK)'s board of commissioners for consumer protection, Tirta Segara, said in a Monday webinar that people who got eventually trapped in illegal fintech lending and investments were not exclusively from the less educated demography.

“We see those who want instant wealth without the hard working part of it. Based on our findings, not only the less-educated who fell victim, but many were also people with master’s degrees,” said Tirta in the webinar aired by the Infobank YouTube account on April 19. 

Tirta said illegal fintech victims were generally of groups who made unwise decisions in terms of funding. Having a higher education degree does not guarantee one’s sufficient financial literacy, he added.

OJK’s records show Indonesia’s financial literacy is incomparable to the digital inclusion growth, as in 2019 the public's literacy level was 38 percent while the growth of financial inclusion surged by 76 percent. 

The public's understanding of investment products is even lower, scoring only 5 percent, as they fail to grasp the underlying concept of investments and the correlating principle between risks and yields. Thus, people are easily persuaded by promises of high interests and zero-risk financial yields.

“They only trust the websites and virtual transactions and are in the dark as to where their investments are being invested. Many of them do not understand compound interests,” said Tirta, adding that this condition exacerbated illegal fintech practices despite constant acts by the OJK task force to counter the growth of these illegal online lending platforms. 

Read: Illegal Fintechs, Investments Rampant amid Pandemic: OJK

FRANCISCA CHRISTY ROSANA