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Indonesia’s Fintech Sector Gets Boost with New Regulation

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Jakarta, Indonesia - The Indonesian Financial Services Authority (Otoritas Jasa Keuangan or OJK) has issued a new regulation aimed at enhancing its regulatory and supervisory roles in overseeing the country’s fintech sector. Effective February 19, 2024, Regulation No. 3 of 2024 on the Implementation of Technological Innovation in the Financial Sector (Regulation 3/2024) revokes and replaces OJK Regulation No. 13/POJK.02/2018 regarding Digital Financial Innovation.

Goals of the New Regulation

The new regulation seeks to promote fintech innovation while ensuring financial system stability, market integrity, and consumer protection. To achieve this goal, it sets out a framework for the regulation and supervision of fintech implementation, including provisions for creating a testing environment (sandbox), licensing, monitoring, evaluation, financial education, consumer protection, personal data protection, institutional aspects, and fintech activities.

Who Can Operate as a Fintech Innovation Provider?

To operate as a fintech innovation provider (FIP), entities must be actively involved in technology-driven innovation affecting products, services, activities, and business models within the digital financial ecosystem. They must also operate as financial services institutions or other entities involved in financial activities and be legally established as limited liability companies or other appropriate legal entities.

Key Requirements for Fintech Innovation Providers

Registered fintech innovation providers (FIPs) or those with a valid business license must meet several requirements, including:

  • Joining the designated association of FIPs appointed by OJK
  • Conducting independent evaluations
  • Having human resources with expertise and background in both information technology and finance
  • Utilizing tools to streamline OJK’s supervisory processes and ensure compliance
  • Submitting monthly, annual, and incidental reports to OJK
  • Developing a strategic plan for their electronic system aligning with their business plans
  • Establishing data centers and disaster recovery facilities within Indonesia
  • Upholding the integrity and accessibility of personal, transactional, and financial data from receipt to disposal
  • Maintaining the confidentiality and security of consumer data and information
  • Prioritizing good institutional governance principles
  • Implementing programs to combat money laundering, terrorist financing, and the proliferation of weapons of mass destruction within the financial services sector.

Conclusion

The new regulation aims to promote innovation in Indonesia’s fintech sector while ensuring a safe and stable environment for consumers. As the country’s fintech industry continues to grow, Regulation 3/2024 is expected to play a crucial role in shaping its future development.