The Jakarta Post
President Joko “Jokowi” Widodo has called on financial technology (fintech) companies to practice good governance and accountability to mitigate the risks that come with rapid technological developments in the financial sector.
In his prerecorded remarks to open the Indonesia Fintech Summit 2020 on Wednesday, Jokowi said that fintech services providers should remain wary of certain security risks such as cybercrime, misinformation, transactional errors and data misuse that could harm the quality of their services.
“Fintech players should implement good governance and accountability to mitigate those risks,” the President said, particularly as the nonbank sector was not regulated as strictly as the banking sector.
“This way, [fintechs] can provide secure services to customers and make great contributions to micro, small and medium enterprises [MSMEs] as well as the national economy,” he said.
According to an earlier report from the National Cyber and Encryption Agency (BSSN), Indonesia saw more than 88 million cyberattacks during the first four months of the year, with March recording the highest daily average in cyberattacks.
Several online marketplaces and fintech platforms experienced data breaches this year. Most recently on Oct. 28, fintech aggregator Cermati.com was the victim of data theft that obtained the data of almost 3 million users that were sold online for US$2,200. The data theft came to light on Nov. 1, in a tweet posted by cybersecurity researcher and consultant Teguh Aprianto to his Twitter account, @secgron.
Cermati.com is the second fintech platform to experience a data breach this year, after the data of around 890,000 Kreditplus users was leaked in August.
The Financial Services Authority (OJK) was pushing the House of Representatives to conclude its deliberation on the personal data and protection bill for preventing and solving such cases, chairman Wimboh Santoso said on Wednesday at the summit.
Indonesia has no regulation in place that authorizes law enforcement to bring criminal charges against perpetrators of data breaches, theft or misuse. The 2008 Electronic Transaction and Information Law only allows cyberattack victims to file for compensation for breach of their personal data.
“The measure is not sufficient punishment, and we hope that the [data protection] bill can deter people from misusing customers’ personal data,” said Wimboh.
The Indonesia Fintech Association (Aftech) has long been pushing for the bill’s passage, with Aftech managing director Mercy Simorangkir saying last year that the bill was vital for moving the industry in a more responsible direction.
The government has pinned its hopes on fintech companies to help boost financial inclusion to its 2024 target of 90 percent. Indonesia’s financial inclusion rate in 2019 was 76 percent, lower than the rate of other Southeast Asian countries like Singapore (98 percent), Malaysia (85 percent) and Thailand (82 percent).
OJK data also showed that Indonesians still rated low in digital financial literacy. Only 35.5 percent of the population demonstrating familiarity with digital financial services (DFS) last year, while just 31.26 percent of Indonesians used DFS.
“I hope that fintech innovators will not merely become lenders and online payment service providers. They should also continue to develop themselves to provide other functions like aggregation, equity crowdfunding and project finance services,” the President said.
Finance Minister Sri Mulyani Indrawati added during the opening ceremony that the government was committed to supporting such efforts by developing more information and communication technology (ICT) infrastructure to expand internet access nationwide.
Sri Mulyani said the government had allocated Rp 413 trillion (US$29.17 billion) to build ICT infrastructure for digital development and Rp 30 trillion to develop digital technology. The ICT infrastructure allocation included building base transmission receivers in more than 5,000 villages and 12,377 other locations as yet unconnected to internet networks.
“The terms outermost, marginalized or left behind regions will be no more when it comes to internet connection,” she said.
Bank Indonesia (BI) Governor Perry Warjiyo also expressed the central bank’s commitment to achieving the country’s target for financial literacy and inclusion, even as BI continued with its own digital transformation.
The central bank had so far adopted several digital technologies as part of its drive toward digital transformation, including the QR Indonesia Standard (QRIS) for digital payment services and an open banking application programming interface (API) to facilitate interconnectivity between banks and fintech.
“We are also continuing to promote digital banking, to develop the payments ecosystem for retail and to conduct our own regulatory reform to make agile policies that support the fintech industry,” said Perry.