Digital Financial Literacy and Technology Adoption for Strengthening Financial Inclusion and MSMEs’ Performance in Banten, Indonesia

Introduction: micro, small, and medium enterprises (MSMEs) in Banten Province, Indonesia, face persistent challenges in financial literacy and the adoption of financial technology (FinTech). Limited access to formal financial services and low levels of financial knowledge constrain their capacity to achieve sustainable growth and resilience in the digital economy. Objective: This study investigates the influence of financial literacy and FinTech adoption on the financial performance of MSMEs, considering financial inclusion, risk management, and financial decision-making behavior as mediating variables. Method: A mixed-method design was applied, combining survey data from 150 MSME owners with in-depth interviews and focus group discussions involving key stakeholders. Structural Equation Modeling (SEM) was employed to test both direct and indirect relationships among variables. Results: Findings demonstrate that financial literacy significantly improves MSMEs’ access to and utilization of formal financial services, thereby strengthening financial performance. Financial inclusion emerged as a key mediating factor linking financial literacy and FinTech adoption with business outcomes. The use of FinTech tools facilitates efficiency, access to innovative services, and sustainable business practices, though these benefits depend on adequate digital financial literacy. Conclusion: Strengthening financial literacy and advancing inclusive FinTech infrastructure are essential strategies to empower MSMEs. These interventions are crucial for enhancing financial resilience, competitiveness, and sustainable development within an increasingly technology-driven economy.