A New Framework for Amplifying Business Performance of SMEs in Riau Province through Digital Finance and Financial Literacy

The development of Small and Medium Enterprises (SMEs) plays a pivotal role in the Indonesian economy, particularly within Riau Province. These SMEs not only serve as significant sources of employment but also act as drivers for substantial economic expansion. Nonetheless, despite their substantial potential, several critical challenges impede the progress of SMEs in this region. Firstly, SMEs in Riau Province have encountered a concerning decline in profitability, compelling many entrepreneurs to seek survival strategies amid intensifying competition. Adapting their business strategies to enhance performance and viability becomes imperative. Secondly, the adoption of digital finance within SMEs faces obstacles, as numerous businesses are in the early stages of comprehending and integrating computer and internet technologies into their operations. A proactive approach is required to facilitate SMEs in understanding and embracing digital solutions. Thirdly, there is a pressing need to enhance financial literacy, especially concerning microfinance institutions and Financial Technology (FinTech) in Riau Province. A better grasp of financial principles, access to innovative financial services, and prudent financial management are fundamental to bolstering sustainable SME growth. This research endeavors to construct an integrated framework to address these challenges comprehensively. It explores the potential impact of digital finance adoption and improved financial literacy on enhancing SMEs performance in Riau Province. The method used in this research is descriptive-qualitative based on relevant literature. Through analysis, it can provide valuable insights for governments, financial institutions, and SMEs, thereby encouraging sustainable economic growth in the region.