Fintech, Small Loans Squeeze Pegadaian Business Growth

State-owned pawnshop PT Pegadaian cramped in a stagnant pawn business growth over the past few years. In the first quarter of 2018, the outstanding loan from the pawnshop business grew three percent, then dropped to -0.7 percent in the next quarter before rebounded to 0,8 percent and 0,6 percent consecutively until the end of 2018. In 2019, the pawn business only grew 2.6 percent in the first quarter, then dropped to -1.1 percent before slightly increased by 1.3 percent in the coming quarters. On the contrary, pawn business, as Pegadaian core business, could grow 4,3 percent and 4,5 percent from 2015 to 2016, respectively.

Pegadaian President Director Kuswiyanto said the rapid growth of financial technology (fintech) was allegedly behind the company’s business stagnation since the emergence of fintech lending that offers microloans makes allured people away from pawnshops. Massive small loans (KUR) offer by banks also contributed to the stagnation, as people could obtain working capital through banks rather than mortgaging their assets.