The Financial Services Authority (OJK) stated that the financial services sector must be backed by fundamental prerequisites, beginning with the establishment of a comprehensive and integrated digital financial ecosystem. Maskum, an advisor to the OJK Digital Financial Innovation Group, remarked that accomplishing this was a collaborative effort that required the help of many people, including regulators, the government, and stakeholders.
The objective, according to the advisor, is to develop a full, integrated, and competitive digital financial ecosystem to accelerate the country’s recovery.
The Covid-19 pandemic, which has affected all business sectors in Indonesia, is the initial source of momentum. However, he believes that this should not be a barrier because OJK sees this as a huge momentum for all economic actors, “including the financial services sector to rise and accelerate digital transformation”.
The second momentum is that Indonesia will now get the handover of the G20 presidency from Italy in 2022. This is a form of international acknowledgement for Indonesia’s successes in dealing with the pandemic problem. Moreover, he believes that these two forces can accelerate the development and application of technology in a variety of areas of people’s life.
The increasing number of digital payments transactions reflects the Indonesian population’s growing digital financial literacy. It also reflects the country’s growing adoption of fintech and e-commerce services. According to Bank Indonesia, digital transactions will continue to expand in 2021, with e-commerce and e-payments increasing by 33.2% and 32.3% respectively. As more e-wallet companies migrate to multi-line enterprises to provide financial services, the industry must increase interconnections among providers to give clients a smoother experience.
Banks are urged to embrace the open banking era by making more application programming interfaces (APIs) available to e-payment companies, Fintechs, and other digital platforms. By utilising APIs, banks will be able to develop a comprehensive payment ecosystem, tap into the current ecosystem, and extend access and market for their services. The adoption of digital banking and even e-wallets is predicted to contribute greatly to economic poverty eradication in the country over time.
OpenGov Asia reported digital platforms have been proven to help ecosystem members adapt, stay resilient, and eventually recover from economic shocks like the pandemic, as well as stimulate economic recovery. The conclusions are based on the most recent research from the University of Indonesia’s Demographic Institute of the Faculty of Economics and Business (LD FEB UI).
The University’s researcher remarked, “Our research finds that during an economic shock, Indonesians persist in looking for new sources of income, and the majority of them dare to take the jump and launch digital-based businesses.” He stated that the emergence of digital platforms and their ecosystem provided a buffer against the economic shock. This is certainly relevant for individuals with no past business expertise who want to jump directly into an online business.
Indonesia can advance digital transformation, notably in the financial industry, according to the Coordinating Ministry for Economic Affairs, as evidenced by the growth of 7.07% in the second quarter of 2021. (Year-on-year). In 2020, Indonesia remained 85th out of 131 nations in the digital innovation index.
Indonesia’s government has launched several programmes to better prepare the country to deal with the potential and problems posed by developing technologies. They are also committed to prioritising infrastructure development, particularly through enhancing connections across the country, as well as accelerating the country’s digital economy’s development. The country’s structural changes are aimed at boosting productivity and competitiveness, as well as reviving industrialisation and encouraging innovation.
