Gen Z Warned About the Dangers of Online Loans

The phenomenon of rising use of online loans, PayLater, and impulsive shopping among young people has drawn serious attention from the education sector and the financial industry. In response to this challenge, Al-Azhar Indonesia University (UAI) together with the Digital Literacy Activists Network (Japelidi), ASPIKOM, and Trimegah Sekuritas organised a programme titled “Fintech Literacy: Young People as Smart Financial Users” held in the Multipurpose Room of Al-Azhar Indonesia University, South Jakarta.

The Rector of Al-Azhar Indonesia University, Widodo Muktiyo, reminded that digital technology should be a means to improve quality of life. “Be an influencer who gives oxygen — healthy and intellectually enriching. Use technology and financial literacy to build a healthy and intelligent financial civilisation,” he said.

The Rector urged students to harness digital technology positively and responsibly, including understanding financial management in the fintech era. He emphasised that the younger generation must be able to be individuals who bring about positive impact through digital media.

The first speaker, Engga Probi Endri, a lecturer at Universitas Mercubuana, stressed that fintech literacy is no longer merely a technical ability to understand financial applications, but a form of self-defence against digital debt traps and the psychological manipulation of digital platforms. “Understand before you use. Fintech literacy is no longer just an option; it is the best self-defence against debt traps and fraud,” he asserted.

A member of Japelidi explained why many young people feel “safe” using digital instalments, because they appear small. Yet, he said, unconsciously those small expenditures can accumulate into a large financial burden.

Meanwhile, Devie Rahmawati of UI Vocational Programme cited various international studies showing that low self-control, materialistic culture, loneliness, and the need to be accepted by one’s environment are important factors driving impulsive buying and digital debt among youth. The Japelidi member added that the younger generation now lives in an era where “debt no longer hurts,” because digital technology has eliminated the “pain of paying” — the discomfort of parting with money.

“If in the past an empty wallet stopped people from shopping, today notifications drive people to check out. Many young people do not realise they are entering a ‘frictionless economy’, a digital economic system that makes borrowing feel light, quick, and almost without psychological obstacles,” said the researcher on digital addiction.

According to the founder of a digital clinic established in 2018, social media and modern marketplaces no longer merely sell goods but sell emotions, validation, and a sense of belonging. “Sometimes what is bought isn’t a product. What is bought is the feeling of being valued. The digital algorithms study users’ emotions, including when someone is sad, tired, lonely, or feels left behind by their social circle. Today the algorithm not only knows what you like; it knows when you are vulnerable,” he told more than 70 students.

In the interactive session, Devie urged students to understand the difference between need and social validation through a simple yet reflective approach. “Today’s financial literacy must also teach impulse control and recognition of psychological manipulation in the digital era. The biggest problem facing today’s youth is not an inability to earn money, but the tendency to feel they already have money too quickly. Add the culture of wanting to look successful on social media, and young people are often willing to buy items beyond their means, including inauthentic goods, for social validation. Many people today look rich but sleep with instalment payments,” she noted.

From the industry side, Ceasarini Felicia of Trimegah Sekuritas explained the importance of changing young people’s mindset from mere consumption to investment and future planning. In her presentation, Ceasarini introduced the basics of the capital market, stocks, bonds, and mutual funds in a simple, relevant way for youths.

“Everyone has different financial goals and risk profiles, so investment strategies must be tailored to individual needs and lifestyles,” she said.