JHP Journal Editor’s Note
Cecep Mustafa
In our modern world, few things feel as magical as a few taps on a smartphone to solve a pressing financial problem. A medical bill disappears. A school fee is paid. Rent is transferred. Relief is instant, almost cinematic. Yet, as with many conveniences, the very speed that delights can also conceal danger. Beneath the polished interface of a lending app lurks a new kind of predator: a digital loan shark. Its ledger is our contact list; its enforcement, calibrated with algorithmic precision. For millions of Indonesians, this is not a distant metaphor but lived reality.
FinTech is not merely a tool; it is a mirror reflecting the profound inequalities of our society. In a nation of over 260 million people, where a significant majority remains unbanked or underbanked, instant digital credit is more than convenience—it is survival. But survival in the digital age has a price, and it falls unequally on those least prepared to defend themselves. Here, the judiciary is called upon not only to interpret the law but to navigate the ethical, social, and human consequences of innovation.
The Allure and Peril of P2P Lending
Peer-to-peer (P2P) lending became a lifeline in Indonesia not by accident but by necessity. Traditional banks often remained distant fortresses, indifferent to the financial struggles of ordinary citizens. The gaps in formal finance became an opportunity for FinTech, and P2P platforms flourished. Between 2006 and 2016, startups grew from a handful to over 165, and loan disbursements surged nearly 100% between 2018 and 2019.
The P2P model is deceptively simple: a digital marketplace connecting lenders, borrowers, and platforms. Its brilliance lies in speed and accessibility, bypassing bureaucracy that often alienates the poor. Yet simplicity here masks complexity. Behind every transaction lies risk, and behind every app, human consequences—sometimes tragic, sometimes morally ambiguous.
The Faustian Bargain: Risks for All
Every innovation carries a shadow, and P2P lending is no exception. Investors face the risk of default—wanprestasi, as the law terms it. The Tanifund platform, for example, reported a 63.9% 90-day default rate. For judges, these are not just statistics but questions of duty, disclosure, and due diligence. How should the law respond when a regulated platform fails to protect investors?
Borrowers, meanwhile, face a more intimate peril. Digital lenders may deploy aggressive collection practices, violating privacy, dignity, and sometimes basic constitutional rights. In the Rupiah Plus case, borrowers’ personal data was disseminated to enforce repayment, violating Pasal 28G of the Constitution, which guarantees privacy. Here, courts confront the uncomfortable reality that a financial instrument can become an instrument of social coercion.
This dual crisis—risk to lenders, exploitation of borrowers—demonstrates the need for the judiciary to look beyond contractual formalities and assess the broader social and ethical implications of technology-enabled finance.
Law in Motion: Regulating a Digital Sprint
The law, by its nature, moves deliberately; technology sprints ahead. The OJK has crafted frameworks—POJK No. 77/POJK.01/2016 and POJK No. 10/POJK.05/2022—to regulate P2P lending, emphasizing licensing, interest caps, data protection, and disclosure. Yet the proliferation of illegal platforms challenges the enforcement power of regulators and the judiciary alike.
For courts, this is no longer a matter of calculating financial loss alone. Judges are called to weigh innovation against justice, efficiency against dignity, algorithms against human rights. In every case, there is a philosophical question: Can the law keep pace with technology without losing its moral compass?
Toward a Judicial Vision of Digital Humanism
The solutions to these challenges cannot rest solely in regulation or technology. They must also rest in ethics, reflection, and foresight. The judiciary can play a pivotal role in fostering what might be called digital humanism: a commitment to ensuring that technology serves people rather than exploiting them.
This vision rests on three pillars:
- Strengthen the Guardians: Regulators and courts must act decisively, enforcing laws against illegal or unethical platforms and safeguarding vulnerable populations.
- Empower Citizens: Digital and financial literacy campaigns can transform borrowers from passive victims into informed actors capable of asserting their rights.
- Ethical Technology: FinTech platforms themselves must embed humanistic principles into their operations, protecting privacy, ensuring humane collection practices, and balancing profit with social responsibility.
Judges, in this landscape, are more than arbiters of contracts—they are stewards of trust, interpreters of rights, and guardians of dignity. The challenge is not merely to apply the law but to ensure that the law resonates with justice in a digital age.
Reflections
The rise of digital lending in Indonesia is emblematic of a larger, global question: How can humanity maintain control over the technologies it creates? As judges and legal actors, we are tasked not only with resolving disputes but with shaping norms that define the moral and ethical architecture of our society. Ultimately, the measure of FinTech’s success will not be the elegance of its algorithms but the integrity of the systems it builds and the dignity it preserves. The future of digital finance—and indeed the future of justice—depends on our willingness to see beyond the screens, recognize human stakes, and adjudicate with both prudence and conscience.
Read More