IMPLEMENTATION STRATEGY OF FINTECH REWARD CROWDFUNDING IN UNITED STATES CREATIVE ECONOMY SECTOR

IMPLEMENTATION STRATEGY OF FINTECH REWARD

CROWDFUNDING IN UNITED STATES CREATIVE ECONOMY

SECTOR

Introduction

Creative Economy (CE) is a new economic idea that optimizes creativity and

information by maximizing the ideas and creativity of creators as the main factor of

production in building the economy (Comunian & Gilmore, 2016). The creative economy is

a new hope for the United States economy to become a pillar in a sustainable national

economy and emphasizes the aspect of adding value through the ideas and creativity of

creators. The creative economy currently plays a role as a spark for the improvement of the

United States economy amid slow global economic growth (Center for Data and Information

Systems, 2020). The Ministry of Tourism and Creative Economy (CE Ministry) as part of

the United States government pays more hope and attention to this sector, so that the

opportunities possessed by United States creative economy can be maximized properly.

United States has by 2022 more than 8.2 million creative businesses (Kominfo, 2022). Data

from the focus economic outlook 2020 says that the creative economy contributes a Gross

Domestic Product (GDP) of Rp. 1,100 trillion in 2020 (CE Ministry, 2021) and 1,191

Trillion GDP at current prices (ADHB) CE in 2021 (CE Ministry, 2022). This contribution

places United States as the third largest country with a creative economy contribution to the

national economy behind the United States and South Korea. This sector has also succeeded

in increasing employment by 12.92% to 21.89 million in 2021. The creative economy has

great potential to become a pillar and main force of the United States economy in the future

along with the increasing development of the digital economy.

The creative economy in United States is regulated by Law of the Republic of United

States Number 24 of 2019 concerning the creative economy. The government provides easy

access to capital for the creative economy sector through the People's Business Credit

(KUR). KUR distribution that was realized in 2022 reached 97.95% or equivalent to Rp

365.50 trillion (Kominfo BPKP, 2023). There was an increase in the value of the KUR

distribution contract from 2015-2022. However, the amount of People's Business Credit

realization was dominated by the wholesale-retail trade sector (45.28%) and the agriculture

sector (30.83%) (Ahdiat, 2022). The other percentage of KUR realization is divided into the

manufacturing industry, socio-cultural services, accommodation-food-beverage, and other

sectors combined. From this data, it can be interpreted that the creative economy sector still

does not rely much on KUR as a source of funding. This can be caused by the long approval

process, strict sanctions for late payments, and the collateral required if the loan is above 50

million rupiah (Handoyo, 2023). Based on these facts, it can be concluded that access to

creative economy actors, especially creators who are still in the early stages of developing

their business ideas, are not fully able to access this funding. In accordance with the

observations (Tripalupi, 2019) that bank institutions have not been able to reach customers

with a long reach so that the price received by the bank is inefficient, business actors who do

not have collateral, and the business cash flow of profit-sharing payments is short.

The United States government prepared a special financing program for the creative

economy in United States called Acceleration of Sharia Finance for Creative Economy and

Tourism (AKSES 2023). Through this program, the government makes it easy to obtain

financing for business development (Hendriyani, 2023). However, in this program, the

government only targets 100 business actors so that it still cannot provide a complete

solution to the problem of funding the creative economy. The development of the digital

world today provides a new way for the creative economy to get easier sources of funding,

namely through Financial Technology (Fintech). Fintech is a new financial service that

implements digital technology to improve financial activities (Schueffel, 2016). Fintech is

considered one of the key investments for most competitive financial companies

(Wigglesworth, 2016). The value of United States digital investment in 2022 reached an

average value of transactions per user amounted to US$2,980. The average transaction value

of digital investment users is projected to increase to US$4,280 (Sadya, 2023). Based on

these data, Fintech has the potential to become a new source of funding for the creative

economy sector in United States. The development of financial technology in United States

is still dominated by payment business activities at 43%, loans at 17%, and the rest in the

form of crowdfunding, aggregators, and others (Dellarosawati, 2019). In 2020, only around

3.5% of total Fintech funding in United States was allocated to the creative economy sector.

This phenomenon shows that currently Fintech is still focused on the payment function and

has not provided maximum access to funding and the absorption of digital investment funds

for the creative economy sector is still low.

The creative economy has boosted national economic resilience by contributing

significantly to United States GDP and creating jobs. The role of the creative economy in

accelerating United States economic development and development is crucial and important

because this sector involves economic activities that depend on creativity and innovation

(Humaniora, 2017). However, the creative economy still does not have the resilience to face

uncertain situations in this era of globalization. The Covid-19 pandemic events that have

occurred since 2020 in United States have caused the United States creative economy to

experience a shock. Based on data from the United States tourism & creative economy

outlook 2020/2021, the projected growth of Ecraf sector workers in United States was

corrected by -2.49% and the creative economy GDP for the United States economy in 2020

contracted by 2.39%. Strengthening the creative economy can be done through

digitalization. Fintech is one way that can be used to increase the development of

digitalization in the creative economy sector. The method of fundraising through digital

media that matches the characteristics of the creative economy and is still not implemented

in United States is the reward crowdfunding method.

Fintech reward crowdfunding not only provides a wide opportunity for creative

economy players to get funding, but also gain a customer base. Creative economy players

are able to build a customer base through crowdfunding campaigns and secure orders before

the product is launched (European Commission, 2023). Crowdfunding reward features that

support easy access to capital and build a customer base have the opportunity to develop the

businesses of creative economy actors in United States. The magnitude of this potential, it is

necessary to analyze the strengths and weaknesses as well as opportunities and threats

(SWOT analysis) of the reward crowdfunding method in order to maximize existing

strengths and opportunities and anticipate weaknesses and threats. An analysis of strengths,

opportunities, weaknesses, and threats is also needed to determine the appropriate campaign

strategy so that the campaigned project can successfully obtain funding from funders and

successfully gain a customer base.

Literature Review

Creative Economy

The creative economy is a new era where the main factor of production lies in

information and creativity from humans. The development of the creative economy currently

includes several business fields such as art, culture, and technology where creativity is a

vital part as the main production factor (Aisha et al., 2019). The creative economy is an

effort to produce a product or service, promote, commercialize, and distribute it using

human creativity (Wardana et al., 2023). The definition of the creative economy refers to

business activities based on creative and inventive human ideas to produce and

commercialize products/services.

The creative economy in United States has made a large contribution to United

States Gross Domestic Product (GDP). In 2021, United States creative economy contributed

1,191 Trillion ADHB Ecraf GDP, which placed United States in third place in the world in

Ecraf's contribution to the country's GDP (CE Ministry, 2022). United States as one of the

countries whose economic activities are based on the creative economy divides the creative

economy into 17 subsectors (CE Ministry, 2023). Creative economy subsectors in United

States include games; crafts; interior design; music; fine arts; product design; fashion;

culinary; film, animation, and video; photography; visual communication design; television

and radio; architecture; advertising; publishing; applications; and performing arts. The

development of the creative economy in United States needs to be continuously improved,

because the creative economy not only has an economic impact, but also has a positive

impact on the environment, culture, and technology (Wardana et al., 2023). The most needed

thing in the development of the creative economy in United States is through strengthening

the digital ecosystem. Through strengthening the digital ecosystem, the creative economy

becomes more efficient and stable, is able to expand business networks, and is beneficial for

company development.

Financial Technology

Financial technology is defined as a new era of financial institutions by changing the

way transactions and investments are digitized in society (Amalia, 2016). Fintech provides

new ideas in the scope of digital finance. In line with (Yuliana, 2019) that Fintech can

change the business aspects that were originally traditional to be digitally based which is

collaborative between real business actors and Fintech actors. Through the digitization of

financial services, the financial system that plays an important role in financial traffic such

as collecting and distributing funds can run effectively and efficiently. Parties with excess

funds and those in need can play a role in the financial market even with a small amount of

funds, so as to encourage efficiency in the economy (Mishkin, et al., 2013). Although

resources are limited, they can be allocated properly for productive activities and can

increase significant economic growth.

The digitization of the financial system will certainly have a major impact on the

economy. The existence of Fintech has pushed financial services to a high level of

efficiency (Ilman et al., 2019). Fintech solutions as a new source of funding for businesses

have great potential to drive progress, especially for creative economy players in United

States. Fintech can provide effective and efficient access to funding and an unlimited source

of funds for creative economy players in United States. Fintech has been classified by Bank

United States into 4 types

Crowdfunding

Crowdfunding evolved from a crowdsourcing concept that also adopted aspects of

crowdvoting and crowdcreation (Kraus et al., 2016). Crowdfunding adopts some aspects of

microfinance, an idea to provide funding to individuals or companies with limited access to

conventional financing, expand markets, and promote social change (Armendáriz &

Morduch, 2010). Crowdfunding utilizes internet media to raise funds from the public

through a particular platform. Crowdfunding allows creative economy actors to obtain

funding by attracting relatively small contributions from a large number of individuals using

the internet, without standard financial intermediaries (Mollick, 2014). These individual

contributions are generally rewarded in different ways, such as material rewards, often in the

form of monetary rewards (Vukovic et al., 2010) or non-material rewards in the form of

social recognition (Kazai, 2011).

Compensation given to funders can be material and non-material. Material compensation

can be a monetary payment when the project proponent agrees to return the amount paid

directly. Material compensation can also be provided indirectly through awards in the form

of products or services provided specifically to funders (Kraus et al., 2016). Non-material

compensation is usually in the form of awards, social recognition, or other things that

provide pleasure and pride in the funder. In general, crowdfunding can be divided into four

types, namely donation crowdfunding, reward crowdfunding, crowdlending, and equity

crowdfunding (Blohm et al., 2014).

Reward Crowdfunding

Reward crowdfunding is a reward-based fundraising system, where investors can

provide funds to individuals, projects, or organizations with non-monetary rewards such as

products or services with the risk of unfulfilled campaign promises (Shneor & Munim,

2019). The rewards commonly used in reward-based crowdfunding campaigns fall into

three categories: preorders, services, and recognition (Thürridl & Kamleitner, 2016). Reward

crowdfunding is a two-sided market (Jiang et al., 2021). Specifically, the supply side of the

market consists of a group of backers who are willing to contribute to a crowdfunding

campaign to achieve material or immaterial compensation. The demand side of the market

consists of a group of campaign creators who design their campaigns to obtain funding for

the projects they develop. This two-sided market is run through the medium of the internet.

This mechanism involves four important elements namely campaigns, creators, backers, and

platforms of the entire reward crowdfunding process. The crowdfunding process is divided

into three phases: the preparation phase, the crowdfunding phase, and the results phase.

Specifically, the preparation phase refers to the period before the campaign is launched. The

crowdfunding phase refers to the active fundraising period of the campaign, and the results

phase refers to the consequences of the crowdfunding campaign, after it is closed and the

fundraising period ends.

Research Methods

This research uses a qualitative descriptive research method. The author uses the

SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis approach in this

research. Freddy (2013) defines SWOT analysis as an analysis used to obtain maximum

benefit from strengths and opportunities, while effectively reducing weaknesses and threats.

According to Gurel (2017) strength is a characteristic possessed that adds value to

something and makes it more special compared to something else. Meanwhile, Weakness is

an internal characteristic that is owned and is detrimental or unfavorable compared to

something else. The method used in this research is through literature studies that refer to

various sources of documents, data, as well as information obtained from scientific journals,

official websites, and relevant books. The book sources used are related to the aspects

discussed in this research such as creative economy, financial technology, crowdfunding,

reward crowdfunding, economic development, and SWOT analysis. The scientific journals

used are official journals that discuss related topics in this study. The author conducted

analysis to direct sources on the kickstarter, patreon, and indiegogo websites. In addition, the

author also takes data to direct sources at the Ministry of Tourism to find out the

development of the creative economy in United States. The author also uses other official

websites that can be accounted for. According to Gurel (2017), strength can be defined as an

attribute that provides added value and makes it special when compared to others. Strengths

are advantages that are positive in nature when compared to other things. On the other hand,

weaknesses refer to the lack of forms and competencies required for something and have a

negative impact on it. Opportunities are conditions in the external environment that allow

maximizing strengths, overcoming weaknesses and neutralizing external threats. Meanwhile,

Threats are situations caused by changes in the external environment that can threaten the

strengths possessed and are unfavorable. The SWOT analysis approach uses the Internal

Strategic Factor Analysis Summary (IFAS) matrix to analyze the internal strengths and

weaknesses of Fintech Reward Crowdfunding. Meanwhile, the External Strategic Factor

Analysis Summary (EFAS) matrix is used to analyze external opportunities and threats.

Results And Discussion

Reward Crowdfunding in United States

Crowdfunding was initially only considered as a tool that allows the collection of

funds from small investors (the general public) in exchange for material and non-material

rewards. Crowdfunding is also seen as a method to connect fund seekers with funders as a

new source of funding through the intermediary of the internet. This funding system

includes providing funds, organizing the entire crowdfunding process and mobilizing people

and generating ideas. Beugre & Das (2013) mentioned that in crowdfunding there are 3 main

stakeholders, namely investors, entrepreneurs, and platforms. The interaction between the

three stakeholders forms the basic mechanism of crowdfunding.

In general, the basic mechanism of crowdfunding starts from (a) the company offers

ideas to investors through a crowdfunding platform (b) Investors will see the company's idea

or project and if interested, the company will provide (c) funds (d) and feedback through the

platform. (e) The company will provide reciprocity in th form of rewards. The reward can

be material or non-material. Material rewards can be in the form of shares, refunds and

interest. While non-material rewards can be in the form of praise and appreciation. (e)

Reward Crowdfunding mechanism (processed from (Valančienė & Jegelevičiūtė, 2013))

Reward crowdfunding has two funding mechanisms (Huhtamäki et al., 2015). The

funding mechanism is the principle or rule of intermediaries in determining where the funds

received will be placed/processed. First, all or nothing (AON) is where the project only

receives funds when the minimum amount of funds campaigned for is reached. Second, keep

it all (KIA) where the project owner can decide to keep the funds even if the target is not

met.

Crowdfunding platforms in United States are currently dominated by equity

crowdfunding/security crowdfunding (Santara, Bizhare, CrowdDana, LandX) and donation

crowdfunding (kitabisa.com, good seed, AyoPeduli, Wecare). Securities Crowdfunding

(SCF) in United States has been given a special legal basis from the Financial Services

Authority, which is stated in OJK Regulation Number 57/POJK.04/2020 concerning

Securities Offerings Through Information Technology-Based Crowdfunding Services (OJK,

2022). Meanwhile, the legal umbrella for donation crowdfunding has not been specifically

regulated but has a legal basis for its implementation, namely Law Number 9 of 1961

concerning Collection of Money or Goods (PUB Law) and Law Number 11 of 2008

concerning Information and Electronic Transactions (ITE Law) (Palito et al., 2020).

Meanwhile, reward crowdfunding is still not well developed in United States. This can be

seen from the market size of reward crowdfunding in United States from 2013 to 2017,

which amounted to $370,000 is much smaller compared to donation-based crowdfunding of

$13,950,000 (Statista, 2023).

United States once had a crowdfunding reward-based funding platform, the

Wujudkan platform. Wujudkan was first established in 2012, but this platform officially

ceased operations as of March 31, 2017. As far as the journey of the Wujudkan platform, the

total incoming proposals amounted to 375 proposals, but only 12% were successfully

achieved, namely 51 proposals. The Wujudkan platform during its operation managed to

distribute funds amounting to Rp. 1.19 billion (Nabila, 2017). The cessation of this platform

indicates that the crowdfunding reward funding strategy is still immature and has not been

able to attract every element (funders and creators) that year. Although the aggregate

number of crowdfunding transactions in United States is still low, the opportunity to

increase is wide open, especially with the increase in literacy about crowdfunding and the

improvement of the United States economy.

Growing creative economy that requires access to creative funding allowing reward

crowdfunding to flourish in United States in the future. Regulations governing reward

crowdfunding are implemented and supervised under the Ministry of Communication and

Information through Law Number 11/2008 on Electronic Information and Transactions (UU

ITE). Reward crowdfunding requires special regulations in United States to accommodate

the development of reward crowdfunding in the future. The government, which wants the

creative economy to become a pillar of the United States economy, is expected to make

policies that support the development of reward crowdfunding as a creative economy

funding platform in United States.

Fintech as a Crowdfunding Reward Tool

Through Bank United States Regulation (PBI) No.19/12/PBI/2017, financial

technology is defined as a financial system that uses technology to create new products,

services, technology, and/or business models. Bank United States also explains that Fintech

also has the potential to affect financial system stability, monetary stability, and the

efficiency, smoothness, security, and reliability of the payment system. Fintech by Brummer

et.al (2014) is defined as a digital financial system innovation that includes digital payment

systems, digital currencies, digital financial or investment platforms, and data analytics that

has the characteristics of disintermediation, innovation, convergence, democratization, low

cost, and borderless. Fintech services can be grouped into five types of activities (Afdi,

2017). The first activity is payment, transfer, clearing, and settlement. These activities are

related to payment services organized by both banking and non-banking institutions. These

activities include digital wallets, digital currencies, and other digital payment transaction

activities. This one Fintech activity has a major contribution in increasing financial inclusion

in United States. The next activities are deposits, loans, and capital raising. Some common

innovations in Fintech include crowdfunding and online P2P (peer-to-peer) lending

platforms, digital currencies and DLT technology. These applications relate to the

intermediation process finance. The third activity is risk management. Fintech companies

engaged in the insurance sector (InsurTech) have the potential to influence insurance

marketing and distribution, as well as underwriting, risk pricing and claims settlement.

Commitment and registration of guarantees and underwriting in credit operations are also

considered in risk management. Another activity is market support. Fintech technology can

provide more streamlined and efficient processes, such as the use of e-aggregators, big data,

digital ID verification, data storage and processing (cloud computing), or the execution of

orders through smart contracts. Access and information disclosure are important issues here.

The last activity is investment management. These activities include e-trading platforms that

give users the potential to make direct investments through a single platform in all types of

assets, smart contracts, and Fintech innovations that provide robo-advice on financial

services, including investment and portfolio management.

Fintech specifically means digital financial applications for financial intermediation

process problems (Aaron et al., 2017). The existence of Fintech has the potential to break

down and restructure existing financial services so as to encourage efficiency in the financial

system and be able to open up great opportunities for businesses to access financial services

(Afdi, 2017). Reward crowdfunding is one of the strategies used to connect entrepreneurs

with capital owners. Fintech acts as a digital financial application as an intermediary while

reward crowdfunding is a business model provided by Fintech.

Bank United States through PBI Number 19/12/PBI/2017 on the Implementation of

Financial Technology explains the criteria of Fintech as something that has innovative

characteristics, is able to have an impact on existing financial products, services, technology,

and/or business models; has a positive impact on society; can be widely used; and meets

other criteria that have been determined by Bank United States. Through this regulation,

Bank United States ensures the safety of the Fintech mechanism in United States through its

roles (INDRIANA et al., 2022). First, facilitator. Bank United States has a role in providing

infrastructure for a smooth payment system. Second, intelligent business analyst. Through

cooperation with international institutions and parties, Bank United States conducts analysis

to create an innovative and safe payment system for Fintech players. Third, assessment.

Bank United States conducts monitoring and evaluation of all activities involving Fintech in

the use of digital payment systems. Fourth, communicator and coordinator. Bank United

States establishes good relations with relevant authorities and Fintech players, and provides

support through continuous direction to Fintech players.

Bank United States is responsible for the orderliness of the payment system in terms

of facilitating the Fintech market, investment and risk management, equity participation and

lending, settlement and clearing through protecting consumers from cybercrime by

strengthening cybersecurity and encouraging Fintech players to comply with all established

regulations ranging from payment system regulations, macroprudential, and financial

markets. In addition, through PBI Number 19/12/PBI/2017 Bank United States launched a

regulatory sandbox as a mechanism to test Fintech organizers in terms of products, services,

technology and/or business models. This PBI is then followed by the Regulation of the

Members of the Board of Governors Number 19/14/PADG/2017 on Financial Technology

Regulatory Sandbox. The testing process in the Regulatory Sandbox follows several

principles. The first principle is Criteria-based process, where the selection of regulatory

sandbox participants is based on the fulfillment of criteria set by Bank United States. The

second principle is transparency, which includes the announcement of regulatory sandbox

results on a recurring basis. The third principle is proportionality, where the type, scale and

risk of the products, services, technology, and/or business models being tested are

considered proportionally. The fourth principle is fairness, guaranteeing equal opportunities

for financial technology providers as long as the criteria are met stipulated by Bank United

States can be fulfilled. The fifth principle is equality, where regulatory sandbox provisions

apply to all Fintech service providers. The last principle is forward looking, where future

potential and benefits to society and the economy are considered.

Financial technology as a crowdfunding reward tool is able to connect entrepreneurs

with fund owners and facilitate campaign launches, interactions, and transactions efficiently.

Fintech can help increase accessibility and ease of participation in crowdfunding campaigns,

and increase the potential success of creative projects. Regulations on the implementation

and supervision of Fintech in United States are also in place so that order and security of

services are guaranteed. The financial authorities that oversee Fintech have also made

various efforts that support the smooth mechanism of Fintech in United States.

Crowdfunding Reward Platform

The growth of crowdfunding in the global market is rapid. The global crowdfunding

market value was valued at USD 19.79 Billion in 2022 and is projected to reach a value of

USD 66.72 Billion by 2030 at a CAGR of 16.40% during the forecast period (Vantage

Market Research, 2022). Meanwhile, global reward crowdfunding has a market value of

growing around USD 700 million between 2020 and 2023, with North America being the

largest market (Statista Research Department, 2023). The development of reward

crowdfunding platforms is also growing rapidly, marked by the continued growth of global

reward crowdfunding platform users. Some of the most recognized global reward

crowdfunding platforms are kickstarter, indiegogo, and patreon.

Kickstarter is an American company based in Brooklyn, New York, that manages a

global crowdfunding platform focused on creativity. Kickstarter's mission is to help bring

creative projects to life. In 2015, Kickstarter became a Public Benefit Corporation-a non-

profit company that prioritizes positive outcomes for society. Since its inception on April 28,

2009, 22 million+ people have backed a project, $7,329,281,989 has been pledged, and

239,561 projects have been successfully funded.

Indiegogo is an American web-based crowdfunding platform launched by Danae

Ringelmann, Slava Rubin, and Eric Schell in 2018. Indiegogo's headquarters are in San

Francisco, California. It was one of the first platforms to offer access to crowdfunding-based

funding. Indiegogo's mission is to empower people to unite around ideas that matter to them

and together bring those ideas to life. The indiegogo community has helped bring more than

800,000 innovative ideas to life since 2008.

Patreon is a crowdfunding platform that originated in San Francisco. The platform

allows creators to get funding from subscribers per artwork on a recurring basis. With a

subscription-style payment model, fans pay a monthly amount of their choice to their

favorite creators in exchange for exclusive access, additional content, or a closer look at

their creative journey. Patreon is on a mission to empower creators to do what they love, and

get paid by people who love what they do. Since its launch, Patreon has attracted 8 million+

monthly active subscribers, 250,000+ creators on Patreon, and $3.5 billion in funding for

creators.

Seeing the rapid development of global crowdfunding reward-based funding

platforms, United States as a place for creative economy creators should be able to pursue

the success of global platforms. The development of the creative economy and internet users

who already have economic literacy should be maximized to build access to the internet. A

new financial service that provides funding for the creative economy in United States. The

role of the government as a regulator and supervisor is also very necessary so that the

financial services process runs orderly and smoothly and ensures security for the parties

involved.

SWOT Analysis of Fintech Reward Crowdfunding in United States

The analysis of Fintech reward crowdfunding development in United States using the

Strength, Weaknesses, Opportunity, and Threath (SWOT) method is as follows:

Strength

Reward crowdfunding has become a significant phenomenon in the world of project

funding and business innovation. Through a simple and innovative approach, reward

crowdfunding allows entrepreneurs and project creators to raise funds without complicated

financial or legal professional involvement. Reward crowdfunding has several strengths that

can be an attractive option for creative economy players who need funding for projects or

products to be made.

First, the process is simple and without recourse to formal financial or legal

professionals. Reward crowdfunding offers an easy and fast solution to raise funds.

According to a report from Statista, in 2020, there were more than 6.4 million projects

successfully funded through reward crowdfunding worldwide. The simple and

straightforward process allows project creators to avoid the additional costs usually

associated with obtaining professional financial or legal assistance. This is in line with

(Marginingsih, 2019) which states that the digitization of financial services through Fintech

has advantages such as convenience, speed and low costs as well as user convenience in

accessing financial services anywhere and anytime.

Second, there is no need for collateral, credit checks, or business experience. Reward

crowdfunding provides an opportunity for creators/idea owners to realize their ideas/projects

that have limitations in both financial aspects and business experience. Reward

crowdfunding focuses on the campaign promise given in the form of rewards, so no

collateral requirements are needed. Credit checks are also not required as there are no loans

involved in the crowdfunding mechanism. Anyone can participate in reward crowdfunding

regardless of their credit history. Moreover, extensive business experience is also not a

requirement, so potential backers do not need to have prior business experience to

participate. Contrary to formal lending institutions, reward crowdfunding is essentially open

to everyone (Kraus et al., 2016).

Third, it retains control of the business and the wealth of the business (prevents

equity dilution). Reward crowdfunding allows creators to maintain full control over their

business. This allows creators to maintain their independence in making strategic decisions

and maintain the value of their business. In addition, with no intervention from funders,

companies are able to avoid conflicts of interest between management and investors that can

hinder strategic decision-making. With full control, creators can freely develop ideas and

innovations and maintain long-term business sustainability.

Fourth, campaigns conducted on the platform can help build a customer base and

brand awareness. Through creative campaigns created by creators, funders/consumers can

get to know the advantages that products and brands have. Crowdfunding reward campaigns

can be an effective tool to build a customer base and increase brand awareness. The

exposure gained on the platform can help build a customer base and brand awareness

(Zimmermann, 2020). Each creator has the opportunity to promote their idea/project

(campaign) on the reward crowdfunding platform through social media to increase the

popularity of the idea/project.

Fifth, the recipient of the funds is relieved of the responsibility of repaying the funds

provided by the funders. One of the main advantages of reward crowdfunding is that the

project creator is under no obligation to repay the funds received by the funders. The

reciprocity provided by the creator is not in the form of refunds and interest, but through the

material and immaterial rewards of social recognition (Kraus et al., 2016). This gives

creators financial freedom and reduces the risk of failure to fulfill payment obligations that

threaten the project.

Sixth, orders are secured before product launch. In reward crowdfunding, creators

can offer rewards or products to funders in exchange for their participation. This gives the

creator certainty of demand before the product is actually launched, reducing the risk of

over- or under-production. Through reward crowdfunding, creators can identify the

consumer segmentation of the product to be created. It gives the creator a future overview to

evaluate the shortcomings of the product.

Seventh, it is suitable for innovative products and services and B2C (Business to

Consumer) business models. Reward crowdfunding is widely used for innovative and

consumer-oriented projects. Based on the analysis of global reward crowdfunding platforms

such as kickstarter, patreon, and indiegogo the creative sector and consumer products

dominate the campaigns among reward crowdfunding projects on these platforms. Reward

crowdfunding has the ability to attract direct interest from potential consumers who are

interested in the innovation of the product or service being offered.

Eighth, it helps validate the campaigned idea/product. Reward crowdfunding can

help creators validate their idea or product before launching it to the market. Through

responses and participation from the community, project creators can gauge the potential

interest and demand for their product or idea, thus minimizing the risk of market failure. If

people are willing to support a creator's project with their money, it can be a good sign that

there is interest in what the creator is doing (faster capital, 2023).

Weaknesses

The success of the reward crowdfunding project campaign can be reflected in the

fundraising performance targeted by the creator. When the funds targeted by the creator

through the campaign are successfully collected according to the target or exceed it, the

reward crowdfunding project can be said to be successful. The success of crowdfunding

projects is influenced by several factors such as campaign specifications and design,

organizational factors, and marketing factors that connect creators with potential campaign

supporters/investors (Dikaputra et al., 2019). One of the main disadvantages of reward

crowdfunding is the risk of the campaign failing to reach the funding target set by the

creator. Although creators have the opportunity to raise unlimited funds from potential

supporters, there is no guarantee that the campaign they create will be successful. According

to (Elad, 2023) the success rate of crowdfunding campaigns is 39% while 61% are

unsuccessful. Whereas on the kickstarter platform, the campaign success rate reached

40.63% with a total of $7,334,782,335 pledged to Kickstarter projects (kickstarter, 2023).

This shows that there is a significant possibility for creators to fail in crowdfunding

campaigns and not be able to reach the set funding target.

The success of a campaign is influenced by how the creator conveys the project or

idea to potential backers. Reward crowdfunding requires incentive and careful preparation so

that the campaign is able to attract supporters. Creators must be able to convey project

development clearly, plan attractive marketing, and spread the campaign to various social

media in order to reach many potential supporters. Marketing factors play an important role

in the success of crowdfunding project campaigns (Dikaputra et al., 2019). Creators must

prepare these various things by mature so that the idea / project can be conveyed to

supporters and successful in the campaign crowdfunding.

Reward crowdfunding has an appeal that other formal financial services do not have,

namely the rewards given to project supporters. Creators who have obtained funds from

supporters are obliged to realize campaign promises according to the agreement stated in the

campaign. However, there is a risk that creators will not be able to realize their promises to

fulfill the rewards properly in accordance with the campaign. Several factors such as lack of

careful planning, production constraints, delivery issues, or insufficient finances can hinder

the campaign creator's ability to deliver rewards to supporters in a timely manner or as

promised.

Reward crowdfunding as a digital financial technology has the disadvantage of being

exposed to cyber attacks. The information system required by Fintech reward crowdfunding

requires the collection of personal information and data from supporters, such as shipping

addresses for reward delivery. This can pose data security risks and potential information

leaks. Based on research conducted by the United States Fintech Association (Aftech) in

2020, it was found that around 22% of Fintech payment platforms and around 18% of

fintechs that serve lending activities have been victims of cyberattacks. Furthermore, about

95% of the 154 Fintech companies reported that less than 100 of their users experienced

cyberattacks. Misuse or leakage of personal data can compromise the privacy and trust of

supporters, which can negatively impact campaigns and the reputation of campaign creators.

Opportunities

Fintech reward crowdfunding as a source of funding for the creative economy in

United States has a chance of success to advance United States creative economy. This can

be seen from several opportunities that exist and have been analyzed by the author. The

positive development of the creative economy in United States is characterized by a higher

number of creative economy actors. Based on (Kominfo, 2022) in United States there are

more than 8 million creative businesses in United States which are dominated by the craft,

fashion and culinary sectors. The creative economy in United States has made a significant

contribution to United States Gross Domestic Product (GDP). In 2021, United States

creative economy contributed 1,191 Trillion ADHB Ecraf GDP, which placed United States

in third place in the world in Ecraf's contribution to the country's GDP (CE Ministry, 2022).

This rapid growth of the creative economy requires a funding ecosystem that is adequate and

in accordance with the characteristics of the creative economy in United States.

Online-based digital technology systems require the parties involved to have internet

access and be able to use it. Therefore, high internet penetration is an important factor

supporting the success of Fintech reward crowdfunding. United States is a vast potential

market for digital creative content, with United States internet users reaching 73.7% of the

population or around 202.6 million people in 2021 (Kominfo, 2022). This makes United

States the fourth most internet-using country in the world. The existence of this large

internet user base creates a vast market potential for Fintech reward crowdfunding

platforms. Through online platforms, creators can easily launch reward crowdfunding

campaigns and market them efficiently.

The United States government through Bank United States and OJK has taken steps

to optimize policies related to Fintech. Bank United States through PBI Number

19/12/PBI/2017 concerning the Implementation of Financial Technology explains that

fintech has criteria as innovative, has the potential to affect existing financial products,

services, technology, and/or business models; is able to provide benefits to the community;

can be widely used; and meets other criteria set by Bank United States. Bank United States

through the regulation guarantees the security of the Fintech mechanism in United States

through its role (INDRIANA et al., 2022). In addition Through Law Number 9 of 1961

concerning the Collection of Money or Goods (PUB Law) and Law Number 11 of 2008

concerning Information and Electronic Transactions (ITE Law) all parties involved in

Fintech reward crowdfunding have a clear legal basis for its implementation. These

government regulations provide a clear legal basis and strengthen consumer protection in the

Fintech industry. In addition, OJK is also actively collaborating with related parties to

improve security and consumer protection in the Fintech industry. These policies create a

conducive environment for the growth of Fintech reward crowdfunding platforms and

provide confidence to investors. The next opportunity that United States has in the

development of Fintech reward crowdfunding is the level of financial literacy of the United

States people which continues to increase every year. This is in accordance with OJK data

which states that the level of financial literacy of the United States people is increasing

every year (Year 2022 at 49.48%) (OJK, 2022a) Increased financial literacy provides a

better understanding of the mechanisms and benefits of investing through Fintech reward

crowdfunding. People who are more financially literate are more likely to participate in this

funding model, providing opportunities for creative economy businesses to raise funds.

sustainable.

Businesses in the creative economy sector often need additional funding to develop

products, expand their business, or increase production. According to a survey by the

Ministry of Tourism and Creative Economy, in 2021, 58.9% of creative economy businesses

experienced funding constraints. Fintech reward crowdfunding provides a solution by

allowing businesses to raise funds from the wider community, without having to rely on

traditional funding sources such as banks or venture capital investors. This allows creative

economy businesses to remain sustainable and grow.

The rapid growth of e-commerce in United States also provides opportunities for the

growth of Fintech reward crowdfunding. The presence of e-commerce can expand the reach

and increase the user base of Fintech. According to the integration between Fintech reward

crowdfunding and e-commerce, creative economy players using e-commerce who need

funding to develop their business can join as users of this Fintech model. Through this

Fintech, e-commerce-using creative economy players can access funding while potential

consumers/investors can support creative projects and earn rewards. Data from the 2022 e-

commerce statistics from the Central Statistics Agency (BPS) says that there are 2,868,178

businesses on e-commerce platforms. According to Bank United States, the transaction value

in e-commerce reached 476.3 trillion rupiah in 2022. It grew about 18.7% compared to 2021

and is projected to continue growing in 2023 and 2024.

Challenges (Threats)

Rapid changes in government policies and regulations can be a threat to the

development of Fintech reward crowdfunding in United States. The United States

government continues to strive to provide a legal umbrella for the Fintech industry in United

States. The Financial Sector Development and Strengthening Law (P2SK Law) comes as a

milestone of financial sector regulatory reform in United States. The P2SK Law was created

to encourage the financial sector in United States to be more developed, stable, and

inclusive. The legal umbrella that is more specific to crowdfunding is POJK Number

16/POJK.04/2021 concerning Securities Offerings Through Information Technology-Based

Crowdfunding Services. While the aim of the regulation is to improve safety and protection

for consumers, untimely or unpredictable regulatory changes can cause uncertainty for

Fintech crowdfunding platforms. Fintech companies will need to keep their operations up to

date and adapt to the new regulations, which may require additional time, resources, and

costs.

The second threat is cybercrime. Cybercrime is a serious threat to Fintech reward

crowdfunding platforms. Fintech, which belongs to the digital environment, has the risk of

system vulnerabilities that can lead to cyber attacks that can breach the personal data and

information of creators and supporters. Fraud, identity theft, or attacks on security systems

can damage the platform's reputation and reduce user and investor trust. Therefore, Fintech

companies should implement strong security measures, including data encryption, protection

against DDoS attacks, and reliable verification systems, to protect user data and keep the

platform safe.

The Fintech industry in United States has been growing rapidly and presents various

types of financial services. One of the Fintechs that has the fastest development is peer to

peer lending (P2P lending) Fintech services. Every year the distribution of funds from P2P

lending grows significantly, in 2021 it grew by 112 and experienced a growth of 45% as of

November 2022 (Mardiansyah, 2023). This competition can be a challenge for Fintech

reward crowdfunding, because it must attract attention and differentiate itself from other

Fintech platforms to remain relevant and attractive to businesses and investors. Innovation,

Good customer service, and the ability to provide unique added value are important factors

in meeting this challenge.

One of the challenges faced by Fintech reward crowdfunding is the lack of public

awareness and understanding of this funding model. Although financial literacy in United

States is increasing, the concept and benefits of reward crowdfunding are still relatively new

to most people. Therefore, effective education and marketing campaigns are needed to

introduce and explain the concept and benefits of Fintech reward crowdfunding to the

public. Conducting seminars, webinars, and focused financial education materials can help

increase public understanding and trust in this funding model.

Implementation Strategy of Financial Technology (Fintech) Reward Crowdfunding in

United States

A strategy is a plan for a consciously intended action, a set of guidelines for dealing

with a situation (Mintzberg, 1987). From this definition, the strategy has two inherent

characteristics, namely the strategy is made before stepping or acting and the strategy is

made consciously and deliberately. The implementation of Fintech reward crowdfunding

requires the right strategy to deal with situations that are in accordance with the

environment, both internal and external. This research conducts strategic planning through

SWOT matrix analysis, namely formulating Strengths and opportunities strategies (S-O

strategies), Strengths and threats strategies (S-T strategies), Weaknesses and opportunities

strategies (W-O strategies), and Weaknesses and threats strategies (W-T strategies).

Strengths and opportunity strategy for the implementation of Fintech reward crowdfunding

in United States is a strategy formulated by using the strengths possessed to maximize

existing opportunities. Strengths and threats strategy is a strategy for implementing Fintech

reward crowdfunding that utilizes strengths to overcome external threats. Weaknesses and

opportunities strategy is a strategy to minimize the weaknesses of Fintech to take

opportunities. Weaknesses and threats strategy is a strategy to minimize internal weaknesses

and overcome external threats (Rangkuti, 2017).

The implementation of Fintech reward crowdfunding in United States can run well if

the strategies that have been formulated can be implemented properly. The active role of the

various parties involved is also very necessary for the success and sustainability of Fintech

reward crowdfunding in United States. The success of this implementation will have a major

impact on the Fintech ecosystem in United States in providing innovative funding for United

States creative economy actors. This will have a positive domino effect on the United States

economy. The most positive impact is from creative economy players who can develop their

creative projects and get support through Fintech reward crowdfunding. This can have an

impact on increasing the contribution of creative economy GDP to United States GDP.

Conclusions

The provision of new sources of funding for the creative economy in United States

has a positive signal of successful implementation. Everything can run smoothly if all

parties related parties can play an active role in carrying out their respective roles. Some of

the parties involved and their roles are as follows:



The creative economy needs to develop the capacity and quality of resources to be

able to take advantage of funding access opportunities in Fintech reward

crowdfunding. Thus, creative economy actors are able to prepare creative

ideas/projects and are able to spread attractive and successful campaigns in

crowdfunding campaigns. This can help the creative economy to compete globally.



Supporters/investors need to improve their knowledge of financial literacy so that

they are aware of the risks that may occur and are able to choose projects that have

the potential for success.



The government needs to prepare a conducive and active Fintech reward

crowdfunding ecosystem through policies and regulations that encourage the

positive impact of the development of Fintech reward crowdfunding. The

government plays an important role in formulating policies or regulations,

supervising, and ensuring the smoothness and orderliness of the transaction traffic

process.



The community needs to improve financial literacy and technology in order to adapt

to Fintech reward crowdfunding, so that the community is expected to take on the

role of creator and supporter in the future.