Consumer protection is the core of the new fintech guideline: Indonesia’s financial services authority

According to OJK, a guideline will ensure consumer protection, liability and integration of three main actors of the industry: banking, capital market and NBFIs

The Indonesian Financial Services Authority (OJK) first mentioned its plans to come up with a regulation for the local fintech industry (venture capitals, angel investors and startups) last year.

Today, OJK revealed an outline of the regulation at the BankTech Asia 2016 event in Gandaria in South Jakarta.

“First of all, it will be [in the form of] a guideline, not a regulation,” said Dumoly F. Pardede, Deputy Commissioner of Non-Banking Financial Institutions (NBFIs) Supervision at OJK.

According to the authority, a guideline will ensure consumer protection, liability and integration of three main actors of the industry: banking, capital market and NBFIs. OJK also highlighted the importance of fintech in pushing the financial inclusion and accessibility to the public and its role in supporting the small and medium enterprises (SME) industry.

The guideline will cover stand-alone fintech companies (e-money service or P2P lending) as well as major financial institutions (product delivery in insurance companies).

“As for these types of activities, we will not regulate them. Instead, we will invite them to register with us,” Pardede said.

“On the other side, we have technology that serves as a core function of financial activities. For example, finance or insurance companies, pawn shop, banking. OJK will regulate such companies so as to provide a level-playing field to other conventional financial entity,” he added.

Emphasising the government’s commitment to support the fintech industry, Pardede said a guideline will be formally announced at Indonesia Fintech Festival & Conference, to be held from August 29 to 30 in Serpong.

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Responding to the proposed new proposal, UangTeman Co-founder and CEO Aidil Zulkifli said the Indonesian fintech industry is still in the early stages and so needs regulation. “The main difference between fintech and e-commerce is that fintech startups need to embrace regulation as a core tenet [of its business],” he said.

However, Zulkifli believes that consumer protection should be given priority when introducing the regulation.

“The [first] focus should not be the level-playing field [among traditional banks and fintech companies], but consumer protection. Number two will be to promote innovation as you need to create a culture of innovation and focus on building what’s good for customers,” he explained.

Zulkifli believes that traditional banking may see fintech startups as a threat. “But to me, fintech startups are more of enablers than competitors. Banks will face more threat from the likes of Google and Amazon in terms of data. It is these companies who are going to disrupt financial services,” he said.

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