Following the global financial crash of 2008 - 2009, the heart of the banking sector finally began to beat once again. One phenomenon of note that emerged in the wake of the crisis was the rise of so-called peer-to-peer (“P2P”) lending services, which offer an alternative to conventional credit facilities organized by banks or other financial institutions. These P2P services were quick to attract the public spotlight, as they offer simplified and expedited procedures, quick lending decisions and better interest rate deals for borrowers, as well as lenders, in comparison with conventional financial-service institutions.[1]
 
As one element of the new “fintech” paradigm,[2] digital P2P lending was initially established in the United Kingdom when the online-lending platform Zopa.com was launched back in 2005.[3] In the wake of this innovation, the market for P2P lending has grown in popularity over the course of the intervening years. Indeed, according to PricewaterhouseCoopers, P2P lending services located within the United States extended approximately USD 5.5 billion in credit facilities in 2014, and this figure is projected to reach USD 150 billion by 2025.[4]
 
In Indonesia, P2P lending facilities did not come to widespread public attention until a couple of years ago, when several local P2P operators managed penetrate the domestic marketplace. Similar to P2P initiatives in other countries, P2P operators within Indonesia offer simple and efficient loan facilities, as well as a number of leniencies as regards collateral and interest rates. The lending facilities offered by Indonesian P2P operators were quick to attract the attention of start-up companies, as well as already existing small- and medium-scale enterprises, which often experience difficulty accessing credit facilities through banks or finance companies, due to the need for collateral and other complicated requirements. As of now, the Indonesian Fintech Association has stated that 17% of Indonesia’s fintech players are currently offering P2P lending facilities. Notable P2P players within Indonesia include Modalku, Investree and Amartha.[5]
 
In a bid to shed a little more light on the issue of P2P lending, this week’s edition of Indonesian Law Digest (ILD) will analyze and address several of the key matters which relate to this emerging field, specifically: