The financial regulator already has a policy, called OJK Regulation (POJK) No. 77/2016, which governs peer-to-peer (P2P) lending fintech companies.

As the country’s fintech industry has grown rapidly in the last few years, the OJK feels the urgency to build a so-called umbrella policy called the Digital Financial Industry (IKD), which will have wider coverage of the sector without the need to go into teeny-tiny details of each type of business.

Sukarela Batunanggar, deputy commissioner for the financial regulator’s research arm, the OJK Institute, said the authority had been more rigid toward conventional banks as it conducted daily supervision based on international standards, which had been adopted into Indonesia’s banking industry.

“However, with fintech [lenders], we are urging them to develop their own disciplinary measures as well as self assessments,” he said recently, pointing out that fintech companies should be concerned with the safety of their products and customer protection.

After fintech start-ups register with the OJK based on the upcoming umbrella policy, Sukarela said they would be required to enter a “regulatory sandbox”, of which regulation was scheduled for issuance in June.

Bank Indonesia (BI), which supervises fintech start-ups offering payment services, has launched the similar regulatory sandbox that would serve as a point of reference for regulating the fintech industry. Both the BI and OJK will use the sandboxes to measure the principal regulations that are necessary in the future.

While the BI takes a more relaxed approach with its sandbox, as it will not deem fintech companies not taking part as illegal, the OJK has hinted otherwise.

“Once the IKD [the upcoming umbrella policy] takes effect, all fintech companies will be required to register with us and go to the sandbox phase if necessary. Otherwise, we will not consider them legal companies,” Sukarela said.

Furthermore, the OJK will cooperate with the Indonesian Fintech Association (AFTECH), which would propose a series of codes of conduct comprising ethical procedures, even to the point of setting a standard level of interest rate for all P2P fintech companies.

AFTECH chairman Adrian Gunadi confirmed the business group would set the codes of conduct to accompany the future umbrella policy, saying that the players were always open for discussion with the OJK as there was “no regulation for fintech firms that is one-size-fits-all”.

On a separate occasion, other AFTECH executives said they were fully aware that fintech firms should be regulated to create a healthy ecosystem. However, they said it was important to have balanced views in forming policies, in which regulators would support businesses without restraining their growth.

“We are happy to be regulated; but if we can ask for a favor, we need regulations that are balanced and fintech friendly,” said the association’s secretary-general, Karaniya Dharmasaputra, during a visit to The Jakarta Post. “Don’t be too tight as it can kill this [fintech] business.”

The business group also hopes that the BI and OJK as the main regulators of the fintech industry could coordinate better in creating policies to avoid overlapping regulations and confusion among business players.

Karaniya added that the OJK and AFTECH were discussing a possible partnership to maintain a healthy fintech ecosystem, in which future fintech start-ups could obtain licenses from the OJK only after registering with the association.

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