Indonesia is amidst a digital transformation stage, with many digital businesses booming, especially in the finance sector. However, these efforts are being hindered by a rampant identity theft problem that the nation is facing.

A recent Ken article detailed out how Indonesia’s emerging online lending industry is plagued by identity theft issues. Indonesia’s online lending have witnessed exponential growth with amount of loans disbursed increasing by 30X in a short period of 2 years between 2017 and 2019.

But as is explored by the above-mentioned article, the sustainability and scalability of this otherwise phenomenal story of financial inclusion for more than 50% of Indonesia’s underserved population is being threatened by the lack of digital trust.

Fraudsters in Indonesia are taking advantage of the nascent nature of Indonesia’s digital economy, and exploiting the limited awareness about identity fraud amongst the citizens of the country. In most cases, fraudsters use the identity information of unsuspecting consumers to obtain loans and credits, leaving the victims burdened with millions of Rupiahs of debt and lenders with NPAs as high as 40%.

This lack of digital trust stems from absence of robust mechanism to drive digital identity verification and digital identity analytics (of which alternate data credit score is a component) which forms the foundation for a paperless and presence less lending ecosystem. For this ambitious journey of narrowing the USD 70 billion credit gap to succeed platforms have to emerge that would a) enable verification of every aspect of consumer identity online without having to submit documents and b) accurately analyze creditworthiness and risk associated with consumers from their digital/digitized footprints.

Following would form the three pillars that would eventually fill this gap in digital trust:

Centralized and up to date data repository (Build identity and attribute can be incorporated in this)
Leverage telecom data
Consumer consent
While it is important that countries like Indonesia march forward with grit and conviction towards a digital economy, it is absolutely critical that they do it with the right measures in place.

Data plays a critical role in ensuring the success of such pursuits, and partners with the right capabilities and track record need to be onboarded to support the nation’s visions and objectives.

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