Aftech is concerned that the unlicensed fintech companies, which are operating in Indonesia, could harm the public because some of them apply harsh measures to collect debts and misuse customers’ personal data, among other violations.

“Fintech companies that have not officially registered with the association and the OJK are actually harming the fintech industry in general because it can damage the public’s trust in the industry, especially in the peer-to-peer lending sector,” said Sunu Widyatmoko, Aftech’s executive chairman for cash loans, in Jakarta recently.

As of September, the OJK’s investment alert task force found 407 illegal fintech firms operating in Indonesia.

Currently, 73 firms are registered with the OJK, with Pasar Dana Pinjaman (Danamas) being the only peer-to-peer (P2P) lender, which has received an official permit from the financial regulator.

As part of the association’s efforts to nip illegal fintech firms in the bud, it has continued its discussion with tech giant Google Indonesia to tighten application registrations on its platform because illegal fintech firms can freely register on Google’s Play Store.

The association acknowledged that it was a challenge to convince Google to take down the apps owned by unlicensed P2P firms because the company, as a global player, gave all individuals the same chance to have their apps on its platforms.

“Currently, Google plays a role in the proliferation of illegal fintech firms in Indonesia.

“Fintech companies that have not officially registered with the association and the OJK are actually harming the fintech industry in general because it can damage the public’s trust in the industry, especially in the peer-to-peer lending sector.”

“It should be underlined that it must adhere to the regulations in the country where it operates, in this case Indonesia,” Sunu said.

In addition, the association has launched a Code of Conduct for Responsible Lending as a reference for fintech companies to follow the rules and protect customers from unethical behavior. Members, who do not adhere to it, face certain penalties.

The fintech industry in Indonesia has grown rapidly with the help of the OJK.

The financial regulator has issued several regulations related to fintech, namely OJK Regulation (POJK) No. 77/2016 that governs P2P lending and POJK No. 13/2018 concerning digital financial innovation.

Aftech chairman Kuseryansyah said the fast growth of the fintech industry in Indonesia over the past few years was due to several factors, with the major ones being the increase in smartphone users, technological advancements and changes in the lifestyles of Indonesians, especially those categorized as millennials.

The association forecasts that the fintech industry in Indonesia will be dominated by players in payments, P2P lending, insurance (insurtech) and wealth management or those engaged in crowdfunding in the future.

Of the 190 Aftech members, 80 are fintech companies engaged in P2P lending, followed by 60 in payments, four in market provisioning, four in crowdfunding, two in financial management, two in insurtech as well as other categories.

“Fintech in the payment sector will dominate the industry, more than P2P lending, because using digital payments have become one of the daily needs of Indonesians,” Kuseryansyah said, adding that nowadays more people were using Go-Pay and OVO for payment purposes.

Go-Pay is a digital payment system used by homegrown ride-hailing app Go-Jek, while OVO, or PT Visionet International, is a subsidiary of diversified conglomerate the Lippo Group.

Popular

Acknowledging our dark past

Iran lawmakers back suspending cooperation with UN nuclear watchdog

Marine authority seizes Malaysian boat for suspected illegal fishing