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Navigating regulatory sandbox initiatives for innovation diffusion in fintech lending: A systematic review

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  • Rahardito Dio Prastowo
  • Dana Indra Sensuse
  • Sofian Lusa
  • Prasetyo Adi Wibowo Putro

Abstract

The development of digital technology has succeeded in providing alternative financial services with the FinTech lending industry. This industry allows direct connection between lenders and borrowers through a digital platform. FinTech lending has unique characteristics that provide advantages over traditional financial institution services, such as utilizing soft information for credit risk assessment, providing unsecured loans, and using third-party platforms to secure transactions. Indonesian government continues to update the regulatory framework for the FinTech industry including the implementation of regulatory sandbox. This effort aims to ensure that the development of digital financial innovation is beneficial and safe for society. Various jurisdictions have also implemented similar initiatives to address issues in FinTech lending, allowing companies to test their operations under regulatory supervision. This research conducted a systematic review using the PRISMA 2020 methodology to understand issues related to FinTech lending and the initiatives provided by regulatory sandboxes to address the issues. The study identified 10 issues in the FinTech lending sector using the Technology, Organization, and Environment (TOE) framework and 11 initiatives from implementing regulatory sandboxes using the Diffusion of Innovation (DOI) framework. Finally, this study highlights the potential for further research regarding the issues of algorithmic bias and monopolistic practices, as well as the exploration of how regulatory sandboxes can mitigate these issues.

Suggested Citation

  • Rahardito Dio Prastowo & Dana Indra Sensuse & Sofian Lusa & Prasetyo Adi Wibowo Putro, 2024. "Navigating regulatory sandbox initiatives for innovation diffusion in fintech lending: A systematic review," Asian Management and Business Review, Master of Management, Department of Management, Faculty of Business and Economics Universitas Islam Indonesia, vol. 4(2), pages 324-339.
    • Handle: RePEc:uii:jrambr:v:4:y:2024:i:2:p:324-339:id:35151
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    3. Péter Fáykiss & Dániel Papp & Péter Sajtos & Ágnes Tõrös, 2018. "Regulatory Tools to Encourage FinTech Innovations: The Innovation Hub and Regulatory Sandbox in International Practice," Financial and Economic Review, Magyar Nemzeti Bank (Central Bank of Hungary), vol. 17(2), pages 43-67.
    4. Kamal Kant Hiran & Anders Henten, 2020. "An integrated TOE–DoI framework for cloud computing adoption in the higher education sector: case study of Sub-Saharan Africa, Ethiopia," International Journal of System Assurance Engineering and Management, Springer;The Society for Reliability, Engineering Quality and Operations Management (SREQOM),India, and Division of Operation and Maintenance, Lulea University of Technology, Sweden, vol. 11(2), pages 441-449, April.
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