Environmental Factors Affecting the Acceleration of Financial Technology (Fintech) Adoption by SMEs in the East Java Region

Abstract

Purpose -This study aimed to help define the environmental factors affecting the acceleration of FinTech adoption by SMEs in the East Java Region. Design/methodology/approach -An empirical study of TOE Framework focused on environmental factors using the data from 402 respondents of SMEs Owners and Managers who have already implemented OVO e-wallet in their business. Primary data was analyzed using SEM-PLS. Finding -The high competition in industry has no connection with the acceleration of FinTech adoption. Environmental variables conclude the prediction 75,8% of FinTech adoption. The most interesting finding among the three factors in environmental factors is only the support from government and vendor that significantly accelerate the fintech adoption by SMEs in the East Java Region. The finding suggested that vendors must actively offer the e-wallet payment services and provide training to merchants. Government support has also shown to be a significant antecedent toward consumers' intention to use the e-wallet payment services.

Embrace Fintech in ASEAN: A Perception Through Fintech Adoption Index

“…This is mainly because factors such as Fintech's image, government provision and consumer innovation influence confidence level toward Fintech, which later boost the Fintech adoption rate indirectly (Hu et al, 2019). As substantiated by Christian et al (2019), supports from government and vendor are able to boost the Fintech adoption through the active e-wallet services offering and training of merchants. The consumers are believed to be more adapting to the use of Fintech due to high digital intelligent and financial literacy (Morgan and Trinh, 2020;Chong et al, 2019).…”

Drivers of the Consumers Adoption of Fintech Services

“…The first line of research studied Fintech adoption on an organizational level (Hua et al, 2019). For example, Christian et al (2020) employed Technology-Organization-Environment (TOE) framework to understand the impact of environmental indicators on small and medium enterprises (SMEs) adoption of Fintech. As for the second line of research it assessed adoption on the consumer level and studied the factors affecting their decisions to accept and use Fintech services (Hua et al, 2019).…”

“…Fintech was used to describe how new technologies like cloud computing, internet of things, big data and mobile technology are employed in creating innovative financial solutions (Hu et al, 2019). Fintech was also used to describe not only the applications or products but also the processes and the business models in the industry of financial solutions that deliver one or more service to end users over the internet (Christian et al, 2020;Ryu, 2018). In the scope of this research, Fintech is used to refer to the innovative financial services which employ technology to build disruptive new services or reshape basic financial services and make them more convenient, affordable, and secure to users.…”

“…For consumers, Fintech provided better and more efficient user experience, user friendly designs, and the ability to acquire information in real time and transparent way (Singh et al, 2020). It has also supplied consumers with variety of products to choose from (Christian et al, 2020), and built solutions that addressed consumers' needs that were not met by traditional financial services (Gomber et al, 2017). As for economy, Fintech contributed to the prosperity of economies by creating employment opportunities and increasing nation's Gross Domestic Product (GDP) (Christian et al, 2020).…”

“…It has also supplied consumers with variety of products to choose from (Christian et al, 2020), and built solutions that addressed consumers' needs that were not met by traditional financial services (Gomber et al, 2017). As for economy, Fintech contributed to the prosperity of economies by creating employment opportunities and increasing nation's Gross Domestic Product (GDP) (Christian et al, 2020). It was estimated that digital finance would boost the GDP in emerging economies by six percent increase by the year 2025, which would result in generating 95 million jobs across all areas of economy (Manyika et al, 2016).…”