Designing micro-fintech models for Islamic micro financial institutions in Indonesia
International Journal of Islamic and Middle Eastern Finance and Management
ISSN: 1753-8394
Article publication date: 16 March 2022
Issue publication date: 19 April 2022
Abstract
Purpose
This study aims to design appropriate micro-fintech models for Islamic microfinance institutions (IMFIs), especially Baitul Maal wat Tamwil (BMT) in Indonesia, thus enabling BMT to combine Islamic social and commercial microfinance optimally.
Design/methodology/approach
This study uses the analytic network process and Delphi methods, with three groups of experts as the respondents, namely, academician-regulators, BMT practitioners and Fintech practitioners.
Findings
The first results show that the micro-fintech tools needed by IMFI/BMT are digital banking, payment, peer-to-peer (P2P) financing, P2P social and e-commerce. These could be developed by a BMT alone or with an APEX or Association, which could also collaborate with an existing fintech company that specialises in micro-fintech, applying the offline to online approach. This means that commercial funding, as well as social fundraising of zakat and waqf, would be conducted online, whereas commercial financing for micro and small enterprise customers and the disbursement of zakat and waqf would be conducted offline. The second results show that the limited open ecosystem and hybrid ecosystem are the most appropriate micro-fintech ecosystems for IMFIs/BMT, with various alternative models. In addition, the private closed ecosystem preferred by BMT would be feasible if all criteria show improvement in the future.
Research limitations/implications
This study is qualitative in nature. The methods used have limitations, meaning the models could be improved by incorporating other methods. Moreover, the case and respondents are all Indonesian, which means that the results may only be applicable to BMTs in Indonesia.
Practical implications
A BMT and/or BMT association could immediately apply micro-fintech with a limited open ecosystem, while in the future, they could apply micro-fintech with a private closed ecosystem.
Social implications
The micro-fintech model could be used to optimise the collections of zakat, infaq and waqf, meaning BMT could provide more social programmes for those in need.
Originality/value
The growth of fintech in Islamic microfinance has occurred only recently, while only a limited number of studies have been conducted; therefore, no study exists on the development of a micro-fintech model appropriate for IMFIs, especially BMT.
Keywords
Acknowledgements
The authors would like to thank Bank Indonesia Institute, Bank Indonesia, for the funding that made this study possible.
Citation
Ascarya, A. and Sakti, A. (2022), "Designing micro-fintech models for Islamic micro financial institutions in Indonesia", International Journal of Islamic and Middle Eastern Finance and Management, Vol. 15 No. 2, pp. 236-254. https://doi.org/10.1108/IMEFM-05-2020-0233
Publisher
:Emerald Publishing Limited
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