Financial literacy improvement strategy to encourage fintech adoption and MSMEs performance in Karanganyar Regency

The understanding of financial literacy and the use of financial technology (fintech) among Micro, Small, and Medium Enterprises (MSMEs) in Indonesia is still low, including in Karanganyar Regency. This condition can hinder the performance of MSMEs amid increasingly competitive business competition. This study aims to analyze the impact of financial literacy on fintech adoption in improving the performance of MSMEs in Karanganyar Regency with user innovation as a mediator. Research sampling using purposive sampling method which is based on certain criteria. The research criteria are MSME players in Karanganyar Regency who have opened a business and adopted fintech ≥ 1 year and are still actively using fintech services. This research data was tested statistically through Smart PLS. The results found that financial literacy can increase user innovation and adoption of fintech services. User innovation can directly encourage MSME players to adopt fintech services. In addition, in mediation, the study found that user innovation can mediate the effect between financial literacy and fintech service adoption. Furthermore, the study found that fintech adoption can boost MSME performance, both in terms of marketing and finance.