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BI’s new ‘fintech office’ to ensure both innovation, security
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New economy: Bank Indonesia (BI) Governor Agus Martowardojo (third from right) with Creative Economy Agency (Bekraf) head Triawan Munaf (second from right) and Deputy Finance Minister Mardiasmo (fourth from right) wear 3D glasses during the launch of the BI Financial Technology (Fintech) office in Jakarta on Monday. (Antara/Akbar Nugroho Gumay)
B
ank Indonesia (BI) on Monday officially launched a financial technology (fintech) office to monitor the services offered by the young and thriving industry so as to ensure innovation continues and consumers simultaneously enjoy security.
BI governor Agus Martowardojo described the new office as an advisory hub for all fintech companies operating in Indonesia and as a facilitator to help the industry expand further and ensure greater financial inclusion in a country where half the population does not have access to banks.
As part of its office, BI plans to monitor the development of fintech companies through its regulatory sandbox, a sort of laboratory where ideas on innovation are shared between regulators and fintech players so they can be tested and evaluated with the central bank’s supervision before they go commercial.
It is a method that has been adopted by other countries such as Singapore and the UK to foster their small, yet booming fintech industries.
“The focus for the sandbox will be on facilitating interactions, on monitoring the development of business innovation and cyber security and on consumer protection, which will be the most important aspect to consider,” BI deputy governor Ronald Waas said on Monday.
BI will have a direct hands-on role in the sandbox, as it would require input from fintech firms as well to draft new relevant regulations.
As a further boost to the industry, the Financial Services Authority (OJK) said that its proper fintech regulation, which will benefit third-party fintech players such as startups, would likely be ready by the end of the year.
“The incentives given by regulators to the industry are the ecosystem for them to grow in,” said the OJK’s deputy commissioner for non-bank institution supervision, Dumoly Pardede.
The OJK already has an existing digital finance regulation, but it only applies to traditional financial players, such as banks.
The continuing rise of fintech services and digital payments in Indonesia is due partly to the increasing number of internet users nationwide. BI noted that there are approximately 90 million internet users, which roughly accounts for 35 percent of the population. By 2020, the country hopes to have more than 100 million users.
There are about 120 fintech firms, mostly startups, currently operating in Indonesia in separate segments, such as peer-to-peer lending, e-wallets, crowdfunding and financial settlements, OJK data show. Total transactions within the fintech platforms are forecast to reach $14.5 billion with an annual growth rate of 18.8 percent expected until 2020, according to market statistics portal Statista.
Fintech players welcomed BI’s new fintech office.
“It’s a good point of entry to have people who are willing to push the industry forward, especially in BI because it has the ability to recommend to other ministries and institutions to harness the industry further,” said Boan Sianipar, vice president of business development and government affairs at the one-year-old fintech firm, Xendit.
