Fintech Exchange2017-07-21 12:40:27
On June 16th, the Chair of Indonesia’s financial regulator, the OJK, launched a “fintech advisory forum” intended to strengthen oversight of one of the economy’s fastest-growing sectors.
Speaking at the stock exchange in Jakarta, former OJK Chair, Mr Muliaman Hadad, said fintech firms should continue their expansion but stressed the need for proper regulation to protect the financial system and prevent money-laundering and terrorist-financing.
Financial technology (fintech, for short) is evolving rapidly in Indonesia. Many hope that it will extend access to financial services to the many millions of Indonesians who do not have bank accounts and provide small businesses with much-needed capital, but regulators are concerned with protecting consumers from scammers and criminal activity. There are 160-odd fintech firms currently operating in Indonesia, and transactions are worth $18.6 billion a year, mostly comprising digital payments for e-commerce purchases handled by start-ups such as Doku and Kartuku.
Most small businesses in Indonesia raise capital by borrowing informally from family and friends because banks consider them too risky.
But increasingly fintech firms such as Amartha and Investree are providing online marketplaces where individuals and businesses can take out loans. Peer-to-peer lending, as these transactions are known, is worth about $30 million.
The OJK’s advisory forum follows regulations earlier this year that establish a regulatory “sandbox”, or incubator, where fintech firms can experiment with innovative solutions without risking the stability of the financial system.
The forum includes experts from Bank Indonesia, government ministries, the fintech association, and the police’s financial crimes department, among others. Similarly, Australia has recently set up Digital Finance Advisory Committee, led by the Australian Securities and Investments Commission, and drawing on a cross-section of the fintech community, academia and consumer advocates.
AIPEG is supporting Indonesia’s regulator to strengthen fintech oversight and working with experts from the Australian Centre for Financial Studies to identify lessons from other countries.
“This forum will benefit the fintech industry by connecting all stakeholders,” said Nia Nadya, a financial sector adviser at AIPEG.