The Financial Technology (“Fintech”) industry is mainly regulated by 3 (three) administrative bodies; the Central Bank of Indonesia (BI), Financial Services Authority (OJK), and the Ministry of Communication and Informatics (Kemenkominfo). BI and OJK are responsible for different segments of the fintech industry. Fintechs that offer payment systems are regulated under BI. Other sectors such as lending, crowdfunding, insurance, etc, fall under the governance of OJK. Supporting the technological aspects of the industry, Kemenkominfo regulates the framework for data protection, data centers and IT infrastructure. Visit us http://japanporn.cc
OJK has released regulation for fintech development and has established a regulatory framework1 through OJK Regulation No. 13/POJK.02/2018 on Digital Financial Innovation in the Financial Services Sector (“POJK 13/2018”). POJK 13/2018 defines Digital Financial Innovation as “any form of innovation in business processes, business models or financial instruments that provide added value in the financial services sector through participation in a digital ecosystem.”,2 which provides a variety of fintech services, such as:3
- Transactional settlements;
- Capital accumulation;
- Investment management;
- Fund accumulation and distribution;
- Market support;
- Other digital supporting services; and/or
- Other financial services operations.
BI has also added regulations with respect to the payment sector in Regulation of Bank Indonesia
No. 19/12/PBI/2017 on the Application of Financial Technology. In these regulations, ‘regulatory sandbox’ is defined as a testing mechanism conducted by the OJK or BI to assess business process reliability, business models, finance instruments, and governance of the Operator.
This “Regulatory sandbox” regime in BI and OJK are designed to evaluate the value of the innovation to the public. After completing the sandbox process, the OJK and/or BI (depending on the nature of the fintech) will issue a ‘recommendation status’ determination for the provider, stating either:456
• Not recommended;
• Required to make improvements.
1. Regulatory sandbox is a mechanism of testing carried out by the Financial Services Authority to assess the reliability of busi- ness processes, business models, financial instruments and administrators; 2. Financial Services Authority Regulation No. 13 / POJK.02 / 2018, Article 1; 3. Ibid., Article 3; 4. Regulation of the Financial Services Authority, Op. Cit, Article 11 (1); 5. Bank Indonesia Regulation No. 19/12 / PBI / 2017, Chapter IV concerning Regulatory Sandbox; 6. Ibid, Article 12 (2).