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HE RESILIENCE OF BAITUL MAAL WA TAMWIL (BMT) AS ISLAMIC MICROFINANCE INSTITUDION AMID DISRUPTION
Riduan Mas’ud
Universitas Islam Negeri Mataram, Mataram, Indonesia Abstract
The people of Lombok, West Nusa Tenggara, are mostly low-income, so most people have difficulty with the services of banking financial institutions (unbankable). This fact is an opportunity and a challenge for Islamic microfinance institutions, especially Baitul Mal Wat Tamwil (BMT), to carry out appropriate interventions to improve the living standards of the Lombok people. This study aims to examine the Baitul Mal Wat Tamwil (BMT) resilience strategy in the era of disruption. The data in this study were obtained through three methods, namely observation, interviews, and literature study. The data obtained were combined and analyzed using descriptive qualitative analysis. This study found that Baitul Mal Wat Tamwil (BMT) collapsed because it could not survive the massive technological disruption. On the other hand, Baitul Mal Wat Tamwil (BMT) can survive due to the ability to adapt amid disruption and the power to foster a loyalist community base built through social funds. Thus, this research provides direction to microfinance institutions to build loyalty and sustainable development.
Keywords: Resilience, Baitul Mal Wat Tamwil (BMT), Disruption Era, Lombok West Nusa Tenggara
1. Introduction
In the era of disruption, some major changes and innovations fundamentally result in changes to all existing orders and systems in a new way. In that era, companies engaged in business and finance were massively required to formulate new strategies and innovations that could keep pace with the enormous technological developments. This is done so that businesses, including financial institutions, can compete with newcomers who first use modern technology. This situation has prompted many parties in various countries, including Indonesia, to investigate the Islamic financial system's role in the disruption era.
The conditions that occurred due to these massive changes have become the basis for Sharia Microfinance Institutions such as Baitul Mal Wat Tamwil (BMT) in Lombok, West Nusa Tenggara, to immediately adapt to the new conditions caused in the era of disruption.
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Baitul Mal Wat Tamwil (BMT) is a Sharia microfinance institution that provides financial services for people not covered by banking services (unbankable). This Islamic Microfinance Institution (BMT) must be supported as an alternative to microfinance because the characteristics of its products are by Islamic teachings (Rahayu 2020; Wulandari and Kassim 2016; Ahmed 2002). Microfinance can be a viable intervention mechanism to improve the living standards of the poor (Ali, Hassan, and Kassim 2019). In recent years, the growth has been quite significant, as evidenced by the establishment of thousands of BMTs throughout Indonesia to support micro, small and medium enterprises (Wardiwiyono 2012;
Rahmawati et al. 2020).
On the one hand, the people of Lombok Island are predominantly Muslim and are engaged in the small and medium business sector, so it is a distinct advantage in developing any micro-enterprise that is focused on them. On the other hand, with the scope of these financial services, it turns out that it does not make BMT grow and develop that easily. BMT faced many obstacles along with the development of information technology. There are at least five indicators of BMT failure: disruption of liquidity funds to meet obligations to members, illogical profit sharing, long-term investments that disrupt cash flow, poor financing, and non-compliance with SOP that result in fraud (Abdurahim and Sofyani 2019).
In Lombok, West Nusa Tenggara in 2015 there were 50 BMT.
Based on data from PT. USSI Mandalika Digital and Head of the Human Resources Development and Training Department, West Nusa Tenggara BMT, explained that in 2019 there was a drastic decline, of which only 24 BMTs remained. The manager of one of the BMTs that closed in Lombok (BMT Nurul Isani Sukadana) said that the closure was due to the inability of BMTs to compete and adapt to technological developments. In addition, poor management is an obstacle to the survival of BMT. Several studies have also shown that these Islamic microfinance institutions' failure to meet their goals is hampered by several obstacles, including asymmetric information problems, the economic viability of the MFI, low investment returns, debt traps, trust, and targeting women as beneficiaries (Ahmed 2002; Wahyudi 2014; Rahayu 2020).
The data on the development of BMT using micro banking system software is based on data from the PINBUK (Small Business Incubation Center) of West Nusa Tenggara and the results of interviews with the Head of the Department of Human Resources Development and Training, BMT West Nusa Tenggara, as follows:
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Figure 1. Development of digital technology users on BMT in Lombok 2018-2022 Source: Processed by researchers based on documentation and interviews
In today's digital era, BMTs need to master technology to access information, conduct promotions and marketing, fast and economical transactions, and expand business networks in order to be able to penetrate the market and be able to compete in an increasingly open and competitive market (Ngadiman et al. 2014; Maulana, Razak, and Adeyemi 2018). The economic maturity shown by BMT turned out to be outmatched by the rapid development of technology and chaos in all sectors, which is called "disruption".
Financial technology has become a necessity for people who have high mobility (Lusardi 2019; Nasir et al. 2021; Abad-Segura et al. 2020). The phenomenon of people who use financial technology more has a reciprocal relationship with the number of financial services that take advantage of the development of financial technology; one of its products is a peer to peer lending (Hidajat 2020b). The majority of these companies are conventional- based start-ups.
This study aims to find and analyze the strategies implemented by BMT in Lombok in maintaining its existence amid disruption and the Covid-19 pandemic. Then, this study also analyzes how BMT in Lombok prepares for its sustainable future to remain the mainstay of the poor in the era of disruption. The purpose of the research was answered by observing and extracting data directly from the field to find out the real condition of BMT in Lombok.
Field observations were also carried out by conducting in-depth interviews with parties
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The development of digital technology users on BMT in Lombok West Nusa Tenggara 2018-2022
Mataram West Lombok Central Lombok East Lombok North Lombok Amount
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involved in the development of BMTs in Lombok. This research is important because the number of BMTs is decreasing yearly. This will make the poor people's expectations pessimistic about gaining access to capital. Therefore, BMTs must be able to adapt, master and apply information technology to continue providing financial services for micro- enterprises.
2. Literature review
2.1 Baitul Maal Wat Tamwil and Disruption
Etymologically, the term "Baitul Maal" means "house of money", while "Baitul Tamwil" means "house of finance" (Ekaviana, Ramadhani, and Mulawarman 2019). BMT is a non-governmental organization because it was founded and developed by the community. Especially at the beginning, it is usually done using resources, including funds or capital from the local community (Rizky 2007). Baitul Maal Waa Tamwil (BMT) is an institution that consists of two terms, namely Baitul Maal and Baitul Tamwil. Baitul maal is more directed to non-profit businesses, such as zakat, infaq and alms. The Baitul Tamwil is an effort to collect and distribute commercial funds (Lisa 2016). According to Amin Aziz, BMT is an integrated independent business centre developed from the concept of Baitul Maal Wat Tamwil (Aziz 1996). In addition, there are instrumental values, namely the prohibition of usury, zakat, economic cooperation, and social security (Prasada 2018;
Rahayu 2020). Based on the Focus group discussion and the guidebook on how to form a BMT compiled by PINBUK 2019, it is stated that the founding members must consist of 20- 44 people. Meanwhile, there are 3 BMT business models: BMT Business Financial (BMT Industry), BMT Empowerment (Community-Based BMT), and BMT Social Financial.
Furthermore, words such as disruption, disruptive innovation, disruptive technology, disruptive mindset, disruptive leader, and so on are increasingly becoming very popular in the wider community. As described extensively by Rhenald Kasali in his book Disruption, the term "disruption" first appeared in the context of business, investment and finance (Kasali 2017). There are two important characteristics of disruption. First, the change is very basic in terms of the business model. Market leader companies are constantly innovating, but innovation is more aimed at maintaining growth and the market. Instead, new companies offer a new business model different from the previous one. Second, disruption always starts in the low-end market by offering a much lower price. Because it initially served the low-end market, market leaders who focused more on the high-end market did not detect the company. Gradually, when this company has a strong market foundation, the quality is improved, leading to the top market. At this point, the disruption theory predicts that the market leader companies will lose.
The acceleration of disruption through digital media encourages BMT to innovate to compete with its competitors. The digital system will facilitate the accountability system for
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Sharia microfinance institutions (BMT) so that institutions do not become marginalized. The digital system will indirectly encourage the transparency of the financial reporting system, increasing public confidence in BMT (Haidar 2021). In addition, a digital system will facilitate BMT services to customers and increase effectiveness and efficiency in its operational activities (Ascarya and Sakti 2021). In general, BMTs must be able to adapt to disruption by utilizing digital media in order to compete with other financial institutions. The emergence of technology-based companies has penetrated a larger market by offering standard financial services to the public directly and conveniently. This encourages traditional financial institutions to expand market reach and improve service quality through digital, strategic alliances and disruptive innovation if they want to continue to exist and compete with fintech companies (Agrawal 2017).
2.2 The Opportunities and Challenges of Baitul Mal Wat Tamwil in the Era of Disruption The era of disruption that was born recently has shaken the business world (Rabbani et al. 2021). The world of microfinance is threatened by the birth of Financial Technology, an incarnation of financial institutions that use technology to market financial services at a very efficient cost and is currently experiencing rapid growth. Disruption is a fundamental change in how people do business so that the old (conventional) ways become outdated.
People used typewriters to create documents in the past, and with word processing on computers (even on smartphones in hand), typewriters became obsolete.
Disruption also affects the financial services business, including microfinance.
Currently, fintech has developed in cities and villages, working with consumers, especially micro businesses (Moro-Visconti, Rambaud, and Pascual 2020). Changes caused by disruption are sometimes ignored by BMT or even against the flow of these changes.
However, this change is certain. If BMT cannot adapt, it can be ascertained that it will not be able to compete. BMT needs to be wise in facing this era of disruption by trying to take advantage of existing opportunities (Suryadi 2018). Some of the things you can do include:
a) The existence of fintech can be used as a source of funds because, after all, fintech needs financial institutions to be more massive in marketing.
b) BMT is a cooperative, a business entity that has the spirit of sharing economy from the beginning of its establishment. Promotion of institutions is of course very important, so that more people invest in the cooperatives that are built, and also take advantage of all financial services (savings, financing, payment services, insurance, and other things.
c) Utilizing fintech-based applications to carry out all cashless transactions, so that money will not leave the cooperative's financial system.
d) We can build a platform that brings together sellers and buyers with an application as a liaison medium.
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e) By establishing a technology company in collaboration with USSI, we can bring together microfinance institutions to take advantage of the USSI platform. With the spirit of sharing economy, thousands of microfinance institutions using the USSI core system can share financial services, savings, financing and payment services.
f) Branchless Banking currently owned can be developed into Outlets that can increase service coverage without the need to open branches.
g) Bank Mini Schools can also be a tool to reach educational institutions that have the potential to become members of KSPPS BMT in terms of financing, savings and other financial services.
As one of the leading sectors in the Islamic finance industry, Islamic financial institutions have several practical opportunities and challenges. These opportunities and challenges are identified from the point of view of human resources, regulation and governance, research and development, literacy, data, and technology (Grassa 2013;
Fathonih, Anggadwita, and Ibraimi 2019). Especially in terms of technology, if BMT does not immediately transform with technology, it will threaten this Islamic microfinance institution in the future because the technical quality of Islamic financial institutions is far below conventional financial institutions.
The challenges of Islamic microfinance institutions are low market penetration, lack of mobilization of funds, high administrative costs (Rahman and Dean 2013), and expensive business due to high transaction and information costs (Hermes and Lensink 2011).
Meanwhile, the Head of the HR Development and Training Department of BMT PINBUK NTB stated that the emergence of Fintech companies with digital systems began to emerge in recent years, threatening the existence of BMT. Many Microfinance Institutions have digitized, but the implementation of Fintech in Islamic microfinance institutions, especially BMTs, is slower than in other financial institutions. The competitive advantage of microfinance institutions in direct contact with the community can be increased through digitalization (Pytkowska and Korynski 2017). The KSU Manager of BMT Permata Hidayatullah Paok Motong, East Lombok, further explained that to increase competitiveness, BMT or Sharia microfinance institutions must be able to adapt to rapid technological developments. In line with that, the Manager of KSU, Syariah Mitra Paerta, Narmada, West Lombok, stated that such a thing is also considered important to be adapted immediately if you do not want to be eroded by the flow of disruption.
3. Methods
The method used in this study is qualitative. Sources of data were obtained from observations, interviews, and literature studies. The data collected through observation was carried out by observing and extracting data directly to the field to find out the real
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condition of BMT in Lombok, West Nusa Tenggara, regarding the resilience of BMT amid exposure to technological disruption. This field data excavation was also carried out by conducting in-depth interviews with parties involved in the development of BMT in Lombok.
The resource persons were selected based on adequate criteria by considering the attachment between work professionalism or the experience of the resource persons in cases related to BMT in Lombok. The selection of other sources was also influenced by suggestions and recommendations from several previous sources whose statements had already been taken.
The data in this study were obtained from observations and interviews, and then the data obtained were combined and analyzed using a literature review approach from several kinds of literature whose quotations have been mentioned in this paper. The literature used is scientific publications, books, and other documents that are considered relevant related to the BMT survival strategy in Lombok in the face of the onslaught of technological disruption. The data obtained were then described and analyzed in depth using the Nvivo 12 Plus analysis software. Thus, this study will provide a description of real field data and accurate analysis to produce representative conclusions.
4. Results and Discussion
4.1 The Resilience of Baitul Maal Wat Tamwil (BMT) in the Middle of Disruption
Microfinance initiatives are a new approach to poverty alleviation and development (Hassan et al. 2021). Microfinance encourages low-income economic activity and reduces poverty because credit granted in subsequent years is used in productive economic activities, increasing household incomes and savings and enabling households to build their capital (Ngumo, Collins, and David 2017; Ahmed 2002). Microfinance is a development tool, alleviating poverty and improving welfare (Ashta 2012; Boccia et al. 2011). The results of other studies reveal that BMT financing is effective in reducing poverty. Most respondents were able to increase their income after receiving BMT financing (Adnan and Ajija 2015).
BMT, as a profit-oriented institution, must be able to survive and innovate amid intense competition between business people. Several things need to be addressed, including:
a. Governance
Governance is a system carried out by all interested parties in a company or institution to properly run its business to improve all parties' welfare (Hill 2001). Governance is a key element for strengthening the MFI's finances and performance. The implementation of governance in Shariah entities is different from conventional ones. the difference is in applying Sharia principles (Syariah compliance). Implementing governance in Shariah
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entities combines transparency, accountability, responsibility, independence, and fairness with Sharia compliance (Mardian, Nissa, and Nasution 2019).
So far, governance management is the main problem for Sharia Cooperatives (Seibel 2007). Improvements in BMT governance must be carried out in order to survive amid intense competition, especially in financial services. BMTs that can survive amid today's intense competition are BMTs that can carry out good governance (Nugroho 2015). Good governance is having a healthy organization supported by an internal control system, as well as having adequate policies and procedures and processing transactions and reporting through a secure IT system (Indra 2018). Implementing Sharia corporate governance is expected to increase public trust and improve the performance of BMT (Khomsatun et al.
2021; Sodiq 2019). Applying good governance will help MFIs grow rapidly and have a macro impact on economic development.
b. Human Resources
Human Resources is the most important element. Human Resource is a central factor in an organization. Whatever the form and purpose, the organization is made based on a vision for the benefit of humans and the implementation of its mission is managed and managed by humans. Without human resources, other resources will be idle and less useful in achieving organizational goals. Even the most sophisticated machine is only a pile of inanimate objects if it is not run or driven by humans.
Human resources are of superior quality and much needed in today's increasingly sophisticated era of technology and science. Human resources in a company's management will impact performance and innovation (Laursen and Foss 2003). The manager of BMT Ar- Rasyada, Mataram, also explained that in an organization, both government and private organizations or profit and non-profit organizations such as BMT could not be separated from the management and quality of human resources leaders and employees.
The presence of human resources that develop Islamic financial inclusion is still minimal. In its journey, many obstacles must be faced by BMT, among which the most need to get attention is the problem of the low quality of Human Resources (Apriadi and Alexandi 2013). The Head of the Human Resources Development and Training Department of BMT PINBUK NTB revealed that the average BMT employees have a high school education.
Microfinance Institutions' human resources' ability to manage their businesses is still largely limited, so in the long term, it will affect the development of Microfinance Institutions and can even become a fairly serious inhibiting factor. Obstacles faced in the development of Islamic Microfinance Institutions include the low quality and capacity of human resources to manage the concepts of Islamic economic development (Wediawati et al. 2018; Mulyati and Harieti 2018; Sudibyo, Puspasari, and Restianto 2022).
9 c. Product and Service Innovation
Product and service innovation is one of the problems in microfinance institutions.
MFIs are required to innovate in order to survive in the era of disruption. Innovation must be understood as the ability to offer new perspectives, frameworks and products rather than mere creativity in replicating conventional products in an Islamic form. In other words, innovation is expected to produce Islamic financial products that will not only differ from conventional financial products in legal status but will also reflect Islamic values in financial practice, bring benefits to society in achieving the goal of having economic justice, minimizing inequality and leading to real prosperity (Laldin and Furqani 2016).
Innovation is an opportunity for mitigating microfinance because of its broad impact on risk factors (Moro Visconti and Quirici 2014). The strategy for product development and innovation of Islamic microfinance institutions begins with the initial step of identifying problems with customer needs and desires for services. When these steps have realized the output, the creation and development of products are carried out. The target of product development for Sharia Community Financial Institutions is small communities. In achieving its objectives, Islamic microfinance institutions must be able to create a fairly good product development strategy.
The innovation index indicators, according to the European Innovation Scoreboard (EIS), are supporting indicators (Human Resources, research, financial and other supporting systems), indicators of company activity (company investment, partnerships and entrepreneurship, intellectual property capacity), and indicators of the effects of innovation activities (Further 2014). Meanwhile, the dimensions that reflect the company's ability to innovate well are creating and adopting technology, interacting and exploring new opportunities outside of business activities, non-technological innovation, and cost-saving strategies (OECD Publishing 2009). BMT must carry out product and service innovation because it significantly triggers and increases customer interest in using BMT services (Dawami 2021).
Adapting to the progress of the times must also be carried out with digitalization to transform the business to improve services to members (Traşca et al. 2019). This is important because some MFIs manage their administration manually or do not use technology yet (Yeow et al. 2018; Soemitra, Kusmilawaty, and Rahma 2022). The development of technology and information systems continues to birth to various innovations related to financial technology (Suryono, Budi, and Purwandari 2020). The rapid development of technology makes it easier for Baitul Mal Wat Tamwil to reach Micro, Small and Medium Enterprises via mobile phones, sending, receiving bills, and paying at low costs, potentially reducing Baitul Mal Wat Tamwil's financial transaction costs dramatically.
The adoption of technology in microfinance has driven improvements in the returns and productivity of their employees by providing a secure, low-cost and reliable means of
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transactional data collection and successful transfer (Rijanto 2020). The competitiveness of Sharia Community Financial Institutions can be improved by solving the problem of non- computerized services (Oseni and Ali 2019). In the context of microfinance and Baitul Mal Wat Tamwil, the practice of online Baitul Mal Wat Tamwil and branchless banking is a model that will be imitated in the management of Baitul Mal Wat Tamwil (Karsidi, Rahab, and Mustofa 2018). For example, in Europe, the benefits of digitization are seen in increased operational efficiency (72% less time to serve customers for microfinance institutions and 67% reduced operating costs (Pytkowska and Korynski 2017). Head of Marketing Division of PT. USSI Mandalika also explained that Baitul Mal Wat Tamwil could use digital media to provide services and various products.
Sharia Microfinance Institutions can also synergize with FinTech startups to improve the quality of technology (Baber 2020). The business potential aligned through FinTech will make it easier for the public to provide services via electronic money, virtual money, and others (Hidajat 2020a). Fintech and digitalization must be implemented as solutions based on a rational calculus of costs and benefits (Pytkowska and Korynski 2017).
d. Regulation and Infrastructure
An external problem that is a priority for Sharia Microfinance Institutions is the absence of specific regulations governing Sharia Microfinance Institutions (Seibel 2007;
Fianto, Maulida, and Laila 2019). The overlapping authority that oversees Microfinance Institutions is one of the problems in developing Microfinance Institutions. Three government institutions are interested in Microfinance Institutions: OJK, the Ministry of Cooperatives and Micro Small and Medium Enterprises, and the Office of Cooperatives and Micro Small and Medium Enterprises. The separation of institutional entities that have authority is a challenge, especially in terms of policy synchronization and the effectiveness of policy implementation (Mughni and Afriadi 2019).
In this perspective, the Government as a regulator must reduce the legal barriers experienced in starting and increasing business scale by returning to business fundamentals and making regulations from the bottom up based on the institution's needs. This provides a more imaginative form of regulatory design in which a clear, open and preferential legal framework to stimulate innovation and business creation can be developed (Callison et al.
2018). To support Baitul Mal Wat Tamwil activities, the government must be active in providing access to capital, organizing clear business continuity, providing guarantees from a market perspective, and other facilities that can support the sustainability of Baitul Mal Wat Tamwil. The development of Baitul Mal Wat Tamwil, in essence, also needs to be done to optimize business activities that have an important role in the economy.
The legislation already stipulates that the legality of legal entities, ratification of amendments to the articles of association, and assistance are the duties and responsibilities
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of the government. Thus, the government has the main goal of creating a healthy economic climate and supporting economic activities that are accessible to the wider community.
Meanwhile, the infrastructure of microfinance institutions such as Baitul Mal Wat Tamwil is already available and improving. However, the application is not running optimally.
Information regarding the existence of Baitul Mal Wat Tamwil is still overlapping, and there is no real data yet. Companion institutions are needed to develop Baitul Mal Wat Tamwil's business activities. There are several assisting institutions and consultants for Baitul Mal Wat Tamwil in institutional development, namely the Small Business Incubation Center (PINBUK), INKOPSYAH, MICROFIN Indonesia, Baitul Mal Wat Tamwil Center, ABSINDO, and PUSKOPSYAH.
The projection of the use of technology and its challenges is based on interview data sources which were coded using the Nvivo 12 Plus analysis software through coding features in the form of Cases and Case Classifications, as shown in the following figure;
Figure 2: Projection of the Benefits of Using Technology and Its Challenges Based on Interview Data
Source: Processed by Researchers Using Nvivo 12 Plus Software
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The data above is the result of processing data from interviews coded using the Nvivo 12 Plus analysis software. The use of the software is then maximized through coding features in the form of Cases and Case Classifications. From the trend of the data, it is known that every informant considers that the use of technology to target the development of Baitul Mal Wat Tamwil in the current era of disruption is very important to be used by Islamic microfinance institutions (BMT) in support services to users. The importance of this technology-based approach is considered to support the quality of services to be more practical, quick, easier to access, and more efficient. However, some challenges must be considered, especially the readiness of Human Resources, Infrastructure, and adaptation issues.
4.2 Sustainability Baitul Maal Wat Tamwil
The main goal of any microfinance institution is profitable operations to maintain stability and sustainability (Tamanni and Haji Besar 2019). Sustainability from an operational and financial perspective and providing microfinance services for the poor are the biggest challenges for microfinance institutions (Abdul Rahman, Al Smady, and Kazemian 2015). Empirical studies on microfinance institutions worldwide show that, in general, it has a positive socio-economic impact on society. Meanwhile, Microfinance Institutions are generally poor in terms of operational or financial sustainability (Ferro 2005). If Baitul Mal Wat Tamwil does not want to experience failure in the era of disruption, Baitul Mal Wat Tamwil must start trying to introduce new financial products and services that are in line with the spirit of disruption. The company's sustainability also depends on innovation because it provides a competitive advantage. It cannot fail in the era of disruption. Baitul Mal Wat Tamwil must start trying to introduce new financial products and services that are in line with the spirit of disruption. The company's sustainability also depends on innovation because it provides a competitive advantage (Lüdeke-Freund 2020;
Shao et al. 2020).
Rapid technological developments have caused drastic changes in many sectors, including innovations that cause old technology to be replaced by new, better technology (Lee et al. 2018). The use of technology will reduce costs and impact the sustainability of microfinance institutions (Wakunuma, Siwale, and Beck 2019). By using the approach that Rhenald Kasali conveyed, there are at least five things that BMT, namely must do: disruption must bring savings, BMT products and services must have better quality than before, Baitul Mal Wat Tamwil products must be able to create new markets, Baitul Mal Wat Tamwil products must be easier to access and reach, and disruption makes things smarter, time- saving and more accurate (Kasali 2017). Therefore, we need applications that have strong
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security and applications that have digital technology development to support the survival of Baitul Mal Wat Tamwil in the era of disruption. The Manager of KSU (Multipurpose Cooperative) Syariah Mitra Paerta, Narmada, West Lombok, also explained that if Baitul Mal Wat Tamwil can create platforms and innovative products and services, Baitul Mal Wat Tamwil will be not only able to survive in the era of disruption, but also be able to strengthen position in the microfinance industry.
5. Conclussion
Based on the data findings and discussion, several things can be concluded as research conclusions, including: first, the technological transformation has changed the order of life, especially in the financial sector. Starting from just a substitute for a typewriter, a calculator machine; then developed into an application to increase efficiency and effectiveness and accelerate the creation of accurate and fast reports. Second, disruption is a challenge for Baitul Maal Wat Tamwil. If technology can be utilized, it will be an opportunity, and vice versa. Third, in the face of disruption, all parties interested in the progress of BMT must improve the quality of human resources managers to create better competitiveness. Fourth, in the new era of digital disruption that is currently happening, the role of digital technology in Sharia microfinance institutions (LKMS) such as Baitul Maal Wat Tamwil is a necessity. The role and function of IT in Sharia microfinance institutions is no longer just a tool but a determinant of the life and death of a business. It is an integral part of all activity units in all work units of Sharia microfinance institutions. Therefore, Islamic microfinance institutions should operate digitally following technological advances so that whatever changes in needs occur in the technological era can continue to be fully supported by technological developments relevant to their time.
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