The Bloom of Education fintech

Glovory Tech
4 min readMar 25, 2021
Illustration by Teddy Tri

Financial technologies or fintech are evolving more than ever. Fintech aims to enhance and automate the distribution and maximization of financial services. The term was primarily used to describe the back-end systems of established financial institutions. However, nowadays, the term is more familiar to customer-oriented services such as investment management, retail banking, peer-to-peer lending, and education.

The shift cannot be separated from startups that disrupt the conventional finance industry by expanding financial inclusion while cutting down the operating costs by using technology. Fintech startups emerge to challenge the traditional financial services as it is more agile and inclusively serving the underserved segment with a better and faster service delivery time.

This article would further discuss the fintech that is focused on education called ed-fintech. There are two versions of the example of ed-fintech we will discuss here. The first is the popular ed-fintech reference that is the blooming student loan platform, especially in developing countries. The second is the platform that helps administrators manage the budget allocation better while ensuring that the student received the best quality of education.

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Student Loan-based Edfintech

Education is a privilege for people living in developing countries. For instance, in Indonesia, higher education is rather too expensive for the average citizen. The cost reaches up to USD 5,000 a year, whereas the average Indonesian family earns only US$2,700 a year. Hence, the enrollment rate freefalling from a 97.2% enrollment rate in elementary school to just 31% at the university level.

Startup entrepreneurs recognize that this is a problem and try to offer a solution by creating an ed-fintech platform. Cicil, Danacita, Danadidik, and Pintek are key players of services that connect funders with borrowers (students & parents) in a peer-to-peer lending scheme. Specifically, these platforms have partnered up with academic institutions to have the money paid directly to the institutions to avoid fraud. The loan can be repaid in monthly installments over a certain period, usually in two to three years. Unlike a traditional bank that needs a long process of data verifications, these apps are embedded with fraud identification. It uses the applicant’s GPS data to verify their claims on where they live and study.

However, this kind of app has also raised special concerns regarding the user’s privacy. In its early time in public around 2016–2018, P2P lending is controversial because the billing method is randomly calling to any number in the user’s phone contact data. Nowadays, this special issue has been resolved as the government put special concern into it. It is a pattern that technology will overdue the regulation, but eventually, the law itself will follow to accommodate the digital era’s development.

Photo by Mufid Majnun on Unsplash

Education management-based Edfintech

The later form of ed-fintech is a web app for education allocation management. Allovue is the pioneer of this category. With its product called Balance, it helps the regional government better monitor the education budget allocation. Balance is a platform that connects regional schools’ financial data system to track both budget and spending with school-level data such as attendance and state test scores. From the data, the chance of loopholes and improvement would be better notice by the decision-makers. Nevertheless, this technology allows the decision to be made in near real-time.

Allovue founder, Jess Gartner, believes that her platform could help educators make better decisions by connecting the three main areas: education, finance, and technology. It is worth noting that close attention to budgeting is mandatory to ensure that the student received the maximum quality of education. Gartner, who has a significant background in education as a teacher, hopes to maximize student outcomes by guaranteeing that the money flows to the right channels and needs.

Photo by NeONBRAND on Unsplash

The idea for Integrated Edfintech Product

Reflecting on how it started to bloom, there is a large opportunity for education enthusiasts to develop such a digital product in financial technology to support the teaching and learning system. Nevertheless, educations have always been the core of a country’s development as it is directly related to the quality of human resources. The first kind of ed-fintech aims to help parents provide payment for the education and the students’ utilities needed during learning. This feature is much more convenient when the second type of fintech — education management-based — is utilized by the schools and the education administrator in a certain region or even country. In this way, the loan taken by the parents could be pressed as efficiently as possible.

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