Fintech Investment: Definition, Tips, and Risks

Jun 29, 2020


Nowadays, financial technology (fintech) has become the choice for investing money. Over the last few years, fintech emerged along with the transformation of technology. It makes all financial transactions, such as payment, savings, or even invest money can be easier and faster with the digital world.

The development of fintech makes peer-to-peer (P2P) lending system growing rapidly because it has attracted the attention of the community. This system is not only intended for someone who needs a business loan, but this also can be used as investing money in the form of loans. This digital-based loan system believed will moves towards bigger so that it can be a good strategy for investment.

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The Definition of Fintech Investment


Fintech investment is a system of investing money or capital by utilizing financial technology, especially those based on digital. With financial technology, investment can be done in the form of mutual funds, stocks, deposits, gold, or even become a lender in peer-to-peer lending system. All of the investment processes can be carried out and controlled by using the internet and technological devices, such as a smartphone.

For instance, in peer to peer lending, the parties who offer loans provide a digital platform which will connect the lenders to the borrowers. In this system, the advantage is the lender will get a higher return than the loaned funds. Meanwhile, the borrowers have two advantages which are lending terms and processes easier and faster.

Investment Tips in Fintech


Viewed from the development of the digital-based financial system in Indonesia, the current wave of fintech will continue towards a bright future. People who invest money in this system will have the opportunity to gain huge profits. However, it is not as easy as we think, before starting to invest, make sure you understand the plan and risk of fintech investment in any country, including Indonesia.

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Here are important tips for all those who want to start to involve in fintech investment world without much risk and will get the profits.

  1. Invest in Various Loans

One strategy to prevent the risks in fintech investment is to spread the investment. For instance, if you want to invest as a lender, do not give all the funds to one borrower because the potential loss is very large. It is better to distribute your funds to several borrower or creditors, so that the potential losses are smaller and profits increases.

  1. Do Not Use Savings to Invest

Separating money for savings and investment is one of effort to reduce the risks that may occur in fintech. For instance, in peer-to-peer lending investments, funds that have been invested cannot be taken back until the borrower returns or repays the loan. Therefore, it would be very dangerous if the loans provided come from saving money. It is better to prepare a new savings account that is indeed allocated to invest in fintech.

  1. Do Not Bet with Fintech Lending Investment Fund

Fintech investment is a process of investing funds to get multiple profits, so it is too risky to make the investment only as gambling. Before investing, prepare all the data needed, do in-depth research, study this field or parties who want to be given funds. By doing so, you can be more confident when deciding to invest the funds into fintech platform or creditors.

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  1. Invest with Confidence

After understanding every risk of fintech investment and preparing the strategy to prevent it, the last thing to do is convince yourself. Investments much better when carried out with confidence so that whatever happens will not be a problem.

Risk of Fintech Investment: Peer-to-peer (P2P) Lending


Investments in fintech fields, especially fintech lending, have various risks which can be the reasons for losses. If the risk in the investment world has been conscious previously, you can prepare all of the investment strategies from the start.

Other than that, by understanding all the risks that might occur in investment, a reliable investor able to take advantage of these risks into a profit. Here are some risks that need to be considered and studied in fintech lending investment.

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