Cooperation needed to elevate fintech industry

• Indonesian Fintech Association to set code ethics for its members
• Low financial literacy a challenge for the government, industry players

FINANCIAL technology (fintech) startups are booming in Indonesia and provide an alternative choice to segments of society that do not have access to conventional financial institutions.

Through Indonesia Fintech Fair 2018 which was held from July 13 to 15 in Jakarta, Indonesian Fintech Association (Aftech) and fintech startup UangTeman (main sponsor) aimed to educate and boost awareness of fintech.

“Fintech is an alternative financial solution which is open to all levels of society, but not many are aware of it. We hope this exhibition can be a medium for the community and fintech industry players to get acquainted, understand, and of course, in the end, use the services of fintech. The event is also to support the agenda of President Jokowi's administration which targets 75% financial inclusion to occur in 2019,” said Indonesian Fintech Association director of public policy Ajisatria Suleiman.

Twenty-six fintech startups, a technology partner and a property developer participated in this exhibition showcasing and educating the public on innovations they offer.

Indonesian Fintech Association treasurer Sebastian Togelang commented that the local fintech industry has great potential since more players are coming in.

“Fintech is able to reach a wider audience that is perhaps untouched by other financial sectors. But, as players, startups need to be responsible and committed.”

The synergy with the government’s agenda was also underlined in this event, especially in terms of consumer protection in the financial industry. The public will now understand more about security related to the financial industry so they feel more comfortable using fintech services.

Currently, Aftech is finalising the code of ethics to set ethical standards which must be obeyed by all members of the fintech association.

Launched in 2015 and opening its membership to the public in January 2018, the association is now supported by 152 fintech startups, 26 financial institutions, and two technology partners.

The Indonesian Financial Services Authority (OJK) director of Regulation, Licensing and Supervision of Financial Technology Hendrikus Passagi thinks that conducting socialisation activities about fintech in various places could help the public understand and benefit.

“OJK continues to encourage and increase transparency in the disclosure of benefits, risks, and costs to financial products or services. It is the players’ responsibility to conduct conformity assessments of products or services with risks faced by financial consumers.

“We also promote simpler procedures for financial consumers to submit complaints and disputes about financial products or services.”

According to a national survey in financial literacy and inclusion 2016 by OJK, Indonesia’s index of financial literacy was only 29.7%.

“This challenge can be tackled if all aspects in society work together. The task to educate the public on financial inclusion is not only ours as regulators, but also belongs to all fintech players.

“The public also needs to know which products and services are legal and supervised by regulators so they can avoid fraud or financial crime,” says Financial Services Authority consumer protection director Sondang Martha Samosir.

Bank Indonesia as the authority in monetary, macro-prudential, and payment systems, appreciates the presence of fintech products and services that combine financial services with technology, thereby driving the shift from conventional business models.

“We are delighted to see how fintech players have helped to promote a cashless society in a short time. Fintech products and services are also getting more developed and varied to provide better options and benefits to the community,” says Bank Indonesia director for payment system policy Erwin Haryono.

Fintech players determined to educate the public

UangTeman chief executive officer Aidil Zulkifli agrees that the main challenge in the local fintech industry is the low level of financial literacy.

“As a player, we work together with regulators in educating the public on financial literacy, and it is not only in one place such as the Greater Jakarta area, but also in remote spots.”

Investree chief information officer Dickie Widjaja tells Digital News Asia that as a pioneer fintech startup, the company has faced challenges in creating awareness about financial inclusion and fintech.

In terms of customer protection, he says, “Even without regulation, it is our responsibility as players to protect our customers and maintain reputations. As time goes by, we scale up our customer protection policies to avoid default.”

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