New Regulation of Fintech in Indonesia

OJK will release a new regulation for fintech in Indonesia in the middle of August 2018. The new POJK will regulate the governance of fintech company.

The Financial Service Authority (OJK) soon will release the new regulation for fintech in Indonesia. The Head Group of Digital Finance Innovation and Micro Finance Development of OJK, Triyono, in Semarang, July 2018, said that this new regulation is hopefully able to issue in the middle of August 2018.

Nowadays there are five types of fintech that under the supervision of OJK which are; peer to peer (P2P) lending, investment, crowdfunding, technology insurance and market support or aggregator company. Meanwhile, the payment fintech fall under the supervision of Bank Indonesia.

Several points become an arrangement in the new Regulations of Financial Services Authority (POJK). The regulation will include the definitions of digital financial innovations. The existence of those definitions will become a public reference related to the fintech limitations that manage by OJK. The new fintech POJK will also elaborate all fintech business type such as P2P Lending and equity crowdfunding.

OJK previously has their regulation related to fintech P2P lending, POJK No.77/POJK.01/2016. In the future, the previous regulation of POJK P2P Lending will be adjusting with the upcoming regulation since the new regulation is more general and related to the finance innovations.

In other words, the new POJK will regulate the governance of fintech company such as the reporting process of fintech company to OJK, the transparency aspect, the consumer protection, and consumer data privacy. OJK wants to have a solid data of the accountable fintech products. Therefore, all fintech players and products must be registered in OJK. 

In the registration process, the fintech company should also include the data of product name, its organizer, the staff of fintech company as well as the company location, how much fee that the company received, and who’s their customer. This registration will also map fintech in Indonesia, and then will be decided again which fintech will fall under the supervision of OJK and include in the regulatory box program.

What Is Regulatory Sandbox?

Regulatory sandbox is a fintech start-up trial program. This program aims the fintech players to test their system and their business within six to twelve months before they fully operated their business.

The fintech company should register themselves to the regulator to join with the regulatory sandbox program. Next, the company will follow several assessment phases such as the assessment of the internal condition and management profile, as well as funding assessment and law consultations.

Through the regulatory sandbox, the regulator will able to know the condition of corporate management and the products that the fintech is offered. The regulator has the authority to give statements about the properness of the company.

OJK’s Warning

OJK has already had a task force called the Investment Alert Task Force that will handle a fintech company that does not want to follow the regulation and harms the people with their business activity. The Investment Alert Task Force is established in 2007 and cooperation with many institutions in Indonesia, such as The Prosecutor Office of Republic Indonesia and Police Department.

Even though it wasn't clear yet what kind of sanction that the task force will do to the disobeyed fintech in Indonesia, some information said that the government would blacklist the company and conduct business revocation. 

Relefance: A Variety of Businesses Actively Getting Involved in Indonesian Fintech