P2P Lending: Offline verification adds more layers to fraud prevention

One of many advantages offered by peer-to-peer (P2P) lending is its lending process, which is relatively faster compared to conventional banks. Many people might wonder why the process can be faster and if the process is done properly to prevent potential frauds.

Due diligence process, including KYC, is an obligation for financial institutions to prevent fraud. This procedure must be implemented by P2P lending.

“In the credit acquisition process or initiation, we must carry out due diligence, including KYC, such as checking to check APU PPT for anti-money laundering and DTTOT to ensure that users are not involved in terrorism,” Investree Chief Risk Officer Amalia Safitri said at Investree’s office in Semanggi. Investree is a pioneer of P2P lending marketplace in Indonesia that has been registered in OJK since 2017.

What makes due diligence process in P2P lending goes faster than conventional banks is technology implementation.

“How do we run the process faster? We collaborate with partners, one of which is WorldWideCheck for checking anti-money laundering. To connect with the partners, we have used technology. They have a platform, we also have a platform, and our platforms are connected with technology so that all checks can be conducted real-time, ” Amalia explained.

However, not all processes in P2P lending are done online. There are times when P2P lending companies still require an offline verification process, especially those whose main target is MSMEs. Low adoption of technology by MSMEs is often a challenge for P2P online companies. Hence, in addition to conducting online due diligence, Investree also conducts field checks or offline verification on new prospective borrowers. While educating them, this way adds more layers to fraud prevention effort.

“Our team visits MSMEs’ business locations because we can’t help but educate them on things such as how to register through the platform, upload documents, and KYC through the platform. While educating, we also do offline verification by visiting the business location, their homes, and checking their original documents. That’s also our effort to prevent fraud,” she concluded.

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