T

he proliferation of financial technology (fintech) firms has compelled the government to plan the establishment of a fintech center in order to better regulate the sprawling industry.

Financial Services Authority (OJK) chairman Wimboh Santoso addressed the plan during a seminar at the Indonesia Banking Expo (IBE), which took place in Jakarta from Tuesday to Wednesday.

The agency, Wimboh said, would unite all government institutions related to fintech as well as the businesspeople themselves.

“Without the existence [of an agency], it is likely that fintech operators could exploit the government and vice versa,” he said. “This fintech center will also keep the government from being arbitrary [to the fintech industry].”

The fintech center, he elaborated, would have three primary functions — to regulate products generated by the fintech industry, to provide equal treatment to fintech firms and to optimize the rules issued by the government regarding fintech.

Furthermore, the establishment of the body would also give customers more protection and help the government to avoid systemic risks coming from fintech products, Wimboh added.

“We hope [we can set up the agency] soon. We are currently discussing this with all bodies related to the matter,” he said.

At present, the rapidly evolving fintech industry is only regulated through the 2014 Trade Law, specifically regarding electronic transactions.

As of February, the OJK recorded at least 600 fintech companies in Indonesia. However, only 157 of them reported their business activities to the OJK.

The OJK requires a minimum of Rp 2 billion in paid-up capital for a fintech firm to file for registration and Rp 5 billion in paid-up capital for a firm to obtain a license to prevent sly players from taking advantage of Indonesia’s lucrative fintech market.

Bank Indonesia (BI) governor Agus Martowardojo said on the same occasion that the government would set up a regulatory sandbox for fintech companies to help them grow.

“We also have actually issued a rule on [regulating] fintech,” Agus said, mentioning BI Regulation No. 18/40/PBI/2016 on payment system processing, which was established last year in conjunction with the launch of BI’s Fintech Office.

Liam Maxwell, the United Kingdom’s first national technology adviser, said that regardless of the development, data security was the one thing that Indonesia — and other countries — must always look out for.

“The number one threat you have is the security threat. No country is 100 percent perfect but one of the biggest changes we [the UK] made throughout the last five years has been to create an environment and economy that is based on the strongest security principles,” Maxwell told The Jakarta Post recently during his visit to Indonesia.

Maxwell, who met with Communications and Information Minister Rudiantara and several other high-ranking officials to discuss Indonesia’s cybersecurity, said that the UK was ready to provide the necessary knowledge to help the Indonesian government on the matter.

“We are working with the [Indonesian] government to help them build a strong cyber-security profile. It is useful to sustain the economy because if your citizens do not trust you, they will not use your services,” Maxwell remarked. “It’s pretty simple. It’s about trust.”

Maxwell said that from his point of view, the fintech industry in Indonesia is expanding at a rapid pace – even quicker than in continental Europe.

“The opportunity [for fintech business] is not just in the size of your population but also because you have the ability for the digital economy to expand and become powerful very quickly due to the dynamic environment in Indonesia,” he said.