3

Gen Z Paradox: High Financial Awareness, High Loan Risk

Indonesia’s Financial Services Authority (OJK) has warned of rising non-performing credit risk, particularly among younger cohorts. On one hand, a Jakpat survey finds that the majority of Gen Z respondents are confident in their financial planning capabilities. On the other hand, this same group emerges as the most vulnerable to being ensnared by online lending.

Jakpat conducted a survey in the second half of 2025 to assess fintech user behavior and habits in Indonesia, involving 2,089 respondents comprising Generation Z (40%), Millennials (39%), and Generation X (21%). The study focused on digital payment types, including e-wallets, banking platforms (mobile/internet and digital banking), and Buy Now Pay Later (BNPL), commonly known as paylater. It also examined fintech categories such as e-wallets, paylater, online loans, crowdfunding, and peer-to-peer (P2P) lending.

The majority of respondents reported using e-wallet applications (93%), followed by paylater services (31%) and cash-based online loans (11%). Meanwhile, 44% of respondents used banking services, of which 89% relied on mobile/internet banking and 50% utilized digital banking.

Gen Z, Financial Planning, and Online Loans

Financial planning is a core component of financial literacy. The Jakpat survey found that 79% of respondents were confident in their financial planning abilities, indicating awareness of the importance of sound financial management in achieving personal goals.

More specifically, Gen Z recorded the highest financial planning comprehension score at 4.11 out of 5, while Millennials and Gen X posted similar scores of 4.09.

“This indicates that Gen Z perceives itself as the most financially literate cohort. However, the research also reveals a clear paradox: Gen Z is simultaneously the segment most vulnerable to online loans. Awareness of sound financial management tends to break down when Gen Z faces urgent financial pressure,” said Aska Primardi, Head of Research at Jakpat.

This statement aligns with recent OJK data showing that personal loan delinquencies exceeding 90 days among borrowers under 19 years old surged by 763% year-on-year (YoY) as of June 2025.

According to Aska, this condition is largely driven by the use of borrowed funds for consumptive rather than productive purposes. Jakpat’s findings show that a larger share of Gen Z uses online loans for daily expenses (56%) and bill payments (42%), although 55% of Gen Z online loan users report using them for urgent needs.

“This typically occurs because their budgets have already been allocated to lifestyle spending, such as attending music concerts or purchasing the latest gadgets. In contrast, Millennials and Gen X tend to use online loans primarily for urgent and unavoidable needs,” he explained.

Aska added that overly easy access further encourages online loan usage. Jakpat’s survey indicates that the top three reasons for using online loans in the second half of 2025 were rapid fund disbursement (63%), fast and simple application processes (61%), and lenient requirements (57%).

“Registration and loan applications can be completed easily through digital platforms, positioning online loans as an instant solution for them (Gen Z). Unfortunately, this convenience often traps borrowers in a debt cycle, where new loans are taken out merely to repay existing online loan obligations,” he said.

To mitigate this debt trap and its detrimental impact on financial health, Aska emphasized that education and debt restructuring interventions are key solutions. “Financial institutions, online loan providers, and regulators are encouraged to shift their focus beyond fund disbursement toward targeted financial literacy initiatives tailored specifically to Gen Z,” he concluded.