1 EXAMINE FINTECH P2PL AND BANKS’ STRATEGY IN MAINTAINING THEIR BUSINESS IN FACING THE FUTURE OF DIGITAL COMPETITION IN INDONESIA: MULTIPLE CASE STUDIES DISSERTATION In partial fulfilment of the requirements for the Degree of Doctor of Philosophy from Institut Teknologi Bandung By YASSER ARAFAT AKHMAD Student ID: 39020020 (Doctoral Program in Management Science) INSTITUT TEKNOLOGI BANDUNG September 2024 1 i ABSTRACT EXAMINE FINTECH P2PL AND BANKS’ STRATEGY IN MAINTAINING THEIR BUSINESS IN FACING THE FUTURE OF DIGITAL COMPETITION IN INDONESIA: MULTIPLE CASE STUDIES By Yasser Arafat Akhmad Student ID: 39020020 (Doctoral Program of Science in Management) This dissertation explores the impact of fintech Peer-to-Peer Lending (P2PL) on traditional banking institutions in Indonesia, examining the strategic responses of commercial conventional banks, Sharia banks, and rural banks in navigating the evolving digital financial landscape. Leveraging a mixed-methods approach grounded in the pragmatist philosophy, the study integrates qualitative and quantitative methodologies to provide a comprehensive understanding of the interactions between fintech P2PL and the traditional banking sector. The qualitative phase includes in-depth interviews with industry experts possessing over fifteen years of experience, offering insights into the key drivers and challenges of digital transformation in the Indonesian financial market. The findings from the qualitative analysis are subsequently validated through quantitative modeling using Structural Equation Modeling (SEM) techniques, ensuring a robust assessment of the variables and their interrelationships. The research identifies critical factors influencing the dynamics between fintech P2PL and banks, including loan distribution strategies, sources of funds, total assets, and company size. The results indicate that conventional and rural banks show minimal disruption from fintech P2PL, while Sharia banks demonstrate a more significant interaction with P2PL platforms. This suggests that Sharia banks are more susceptible to fintech-induced market shifts, necessitating a focus on strategic collaborations and innovations to maintain competitiveness. Moreover, the study reveals that enhancing financial literacy, particularly in Islamic banking, is crucial for fostering a deeper understanding of financial products and services among the broader Indonesian population. In addition to highlighting the varying degrees of disruption across different types of banks, this dissertation contributes to the discourse on sustainable business strategies for financial institutions. It advocates for collaborative models between Islamic banks and P2PL platforms to ensure coexistence and mutual growth, thereby mitigating competitive tensions. Such partnerships can leverage the strengths of both sectors to create a more integrated and efficient financial ecosystem. The research also underscores the importance of regulatory frameworks that support innovation while ensuring financial stability, recommending that ii policymakers consider the unique characteristics and competitive dynamics of the Indonesian financial landscape. The findings of this study provide valuable insights for stakeholders, including financial institutions, policymakers, and academics, in shaping the future of Indonesia’s financial services sector. By offering a nuanced understanding of disruption dynamics and proposing strategies for effective collaboration, this dissertation serves as a foundational reference for developing business models and regulatory policies that enhance the digital competitiveness of Indonesia’s financial sector in the face of rapid technological advancements. Keywords: Fintech P2PL, Digital Transformation, Banking Strategy, Islamic Banking, Financial Ecosystem. iii ABSTRAK MENELAAH STRATEGI FINTECH P2PL DAN STRATEGI PERBANKAN DALAM MENJAGA BISNISNYA DAN MENGHADAPI PERSAINGAN DIGITAL DI MASA MENDATANG DI INDONESIA: STUDI KASUS GANDA Oleh Yasser Arafat Akhmad ID Mahasiswa: 39020020 (Program Doktoral di Keilmuan Manajemen) Disertasi ini mengeksplorasi dampak dari fintech Peer-to-Peer Lending (P2PL) terhadap institusi perbankan tradisional di Indonesia, serta menganalisis strategi respons bank konvensional, bank syariah, dan bank perkreditan rakyat (BPR) dalam menghadapi perubahan lanskap keuangan digital. Dengan pendekatan mixed- methods yang berlandaskan filosofi pragmatisme, penelitian ini mengintegrasikan metodologi kualitatif dan kuantitatif untuk memberikan pemahaman yang komprehensif tentang interaksi antara fintech P2PL dan sektor perbankan tradisional. Tahap kualitatif mencakup wawancara mendalam dengan para pakar industri yang memiliki pengalaman lebih dari lima belas tahun, guna mengungkap faktor-faktor kunci serta tantangan transformasi digital di pasar keuangan Indonesia. Temuan dari analisis kualitatif ini kemudian divalidasi melalui pemodelan kuantitatif menggunakan metode Structural Equation Modelling (SEM), yang memastikan penilaian yang kuat terhadap variabel-variabel yang terkait serta hubungan antarvariabel tersebut. Penelitian ini mengidentifikasi faktor-faktor krusial yang mempengaruhi dinamika antara fintech P2PL dan perbankan, termasuk strategi distribusi pinjaman, sumber pendanaan, total aset, dan ukuran perusahaan.