Fintech Development and Regulatory Frameworks in Indonesia
By preparing a right strategy and taking proactive actions, Indonesia could lead the future of finance and be one of the prominent fintech hubs in Asia.
As the eighth-biggest economy in terms of gross domestic product, and with an internet participation ratio of more than 50% and more than 50 million micro, small, and medium-sized enterprises (MSMEs), Indonesia shows huge potential for fintech. As of 2017, $1.62 million had been distributed through 11 local peer-to-peer (P2P) platforms. However, low financial inclusion and the big financing gap among MSMEs pose a huge challenge, which the government is trying to overcome. Ensuring financial literacy will be key. An example is Finansilaku, which is providing online literacy programs for the development of the next generation. Moreover, fintech companies such as Mekar are creating shared value as P2P lending platforms for women, with a similar philosophy as Grameen Bank. Finally, we also discuss customers’ reluctance to use fintech products and examine how regulators have adopted strategies related to regulation strategy, frameworks, market supervision, and innovation.