Financial Services Authority (OJK) head Triyono said on Friday that the authority was pursuing a “light touch and safe-harbor approach” to encourage what he called responsible innovation, which would prioritize security, customer protection and well-managed risk.

 

“It is very, very important,” Triyono said during a Jakpost Fintech Fest webinar hosted by The Jakarta Post on Friday. “It means no regulatory violations, for example, and also certainly brings benefits to society, handling customers very well and protecting data.”

 

Triyono said the unfolding COVID-19 pandemic was a game-changer for the fintech industry as it had accelerated innovation.

 

As it stands, the industry is heavily regulated, with 135 prevailing regulations related to payment – although some fintech companies also provide other services such as wealth management.

 

Erwin Haryono, executive director of the payment system department at Bank Indonesia (BI), said the central bank was planning to develop a single umbrella regulation for payments that would streamline the existing regulations to encourage more innovation in the industry.

 

The planned umbrella regulation is expected to cover licensing, data policy, supervision and cybersecurity, among other areas.

 

“Hopefully, by the end of the year, we will have one single payment regulation that will be principle-based, and from that, we will have branches – but not as many as we have today,” said Erwin. “It will be very supportive of innovation.”

 

Bank Indonesia is preparing other initiatives based on its 2025 payment system road map, including creating a data hub and real-time payment system called BI-Fast to boost the fintech industry in particular and the economy in general.

 

Indonesia’s economy, said Erwin, was forecast to grow by 5.75 percent per year between 2020 and 2024 if it adopted technological advances, marking an additional 0.55 percentage points in the growth rate, according to data from the Asian Development Bank (ADB).

 

In the second quarter, the nation’s economy contracted 5.32 percent year-on-year (yoy). The government is expecting an annual contraction of between 0.6 and 1.7 percent this year.

 

BI is also providing its Quick Response Indonesia Standard (QRIS) code, a QR code for enabling digital payments. Since its launch last year, Erwin said, the QRIS had facilitated 4.7 million merchants, most of which were micro and small enterprises.

 

For e-wallet Gopay, the pandemic has accelerated the adoption of an investment feature called GoInvestasi, which allows customers to buy and sell gold, according to managing director Budi Gandasoebrata. GoInvestasi is a collaboration with investment platform Pluang.

 

“So, what we are seeing today is a lot of shifts in customer behavior, starting from having to move to online transactions. Also, people are more restrained when it comes to spending, and they see more on investment,” said Budi.

 

“Essentially, we try to cover all the different use cases. And I think underneath what we are really trying to do is solve the daily hassle of users when it comes to payments.”

 

User experience, Budi said, was key to Gopay’s innovations, including its latest investment feature. “We want to make sure that we partner with a platform that is supervised and licensed by OJK as well,” he added.

 

Investment in gold, traditionally seen as a safe haven in uncertain times, is soaring as people turn to bullion to protect their wealth. Meanwhile, Indonesia’s financial market is seeing a rise in retail investors as more financial information becomes available to individuals online.

 

Education fintech company Pintek provides a peer-to-peer (P2P) lending platform for students and educational institutions.

 

Pintek, which was registered with the OJK in 2018, has disbursed more than Rp 100 million (US$6,722.84) in loans to more than 3,000 borrowers in 28 provinces, according to Tommy Yuwono, the founder and president director. More than half are first-time borrowers and women.

 

“My dream is simple; I don’t want people to be afraid to take out loans when it is productive,” said Tomy.

 

“Productive loans, especially for yourself, will level up your living standards and earnings in the future. I hope the education sector, parents and students will […] invest for themselves in education.”

 

Tommy added that the company’s ratio of bad loans was around 0.1 percent, well below the overall non-performing loan (NPL) ratio in the fintech industry, which increased to 7.99 percent in July as a result of a decline in income among borrowers.