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Official hinted the institution’s grand plan for the sector, acknowledging fintech startups’ role in pushing for financial inclusion

The Indonesian Financial Services Authority (OJK) first mentioned plans to set up regulation for local fintech industry last year, which is meant to set up requirement for both venture capitals, angel investors, and startups alike.

Today, during the BankTech Asia 2016 event in Gandaria, South Jakarta, the institution finally revealed an outline of what the new regulation will entail.

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

Highlighting the important role fintech plays in pushing for financial inclusion and accessibility to the public, also its role in supporting small and medium enterprises, OJK aims to initiate the creation of the guideline to ensure consumer protection, liability, and integration of three main actors of the fintech industry: banking, capital market, and non-banking.

The guideline will cover fintech services provided by stand-alone companies such as e-money service or P2P lending, and fintech services as part of major financial instutions such as product delivery in insurance companies.

“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 serve as a core function of financial activities. For example, finance or insurance companies, pawn shop, banking … for those fintech companies, of course OJK will issue regulation as to provide level playing field to the other conventional financial entity,” he further explained.

Stressing the government’s commitment to support Indonesian fintech sector, Pardede also stated that a complete version of the guideline will be announced during the Indonesia Fintech Festival & Conference event in Serpong on August 29-30.

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Responding to the proposed new guideline, in a different session of the event UangTeman CEO and Co-Founder Aidil Zulkifli agreed that the Indonesian fintech industry is still in its early stage and is in need of a regulation.

“The main difference between fintech and e-commerce startups is that fintech startups need to embrace regulation as a core tennet [of its business],” he said.

However, Zulkifli believes that consumer protection should be a priority when it comes to setting up the new regulation.

“The [first] focus should not be to level the playing field [between 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 also had a shocking opinion on what he believed will threaten the conventional banking and finance industry.

“Traditional banking may see fintech startups as a threat, but I don’t think that’s the case as fintech startups are more of enablers instead of competitors. Banks should be more threaten by the likes of Google, Amazon in terms of data. Disruption of financial services will be from them,” he said.

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