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Digital Payment Transformation PDF
Digital Payment Transformation PDF
Transformation
BANK INDONESIA
AGENDA
03 Policy Responses
AGENDA
Fintech 2.0 (Financial Institution) Fintech 3.0 & 3.5 (Startup Companies)
Ref: World Economic Forum, The Evolution of Fintech: A new post-crisis paradigm, Arner, 2015
,
……
Trends in Payment System
Technological innovations bring changes in payment system landscape
1 Bank
Payment Channel
Various payment channels, mostly using
Non-Bank
mobile technology, that provide easier
and faster payment services
2 Payment
Technologies
Technological innovations, such as NFC, RFID,
QR Code, etc, accelerate the transaction
process, offer cheaper fee and provide safer
Internet Payment Mobile Payment Card reader service
3 Players
Becoming
5% the biggest
2% digital economy
26% in
912020
%
Source: BBVA Research, Bloomberg, CEIC, World Bank, WeAreSocial2018, Newzoo report
2015
……
Changing Behavior of Payment Transaction
The use of cheque and BG continues to decrease while the card use tend to increase over the years
2017 2,5 B
30% 2014
1,7 miliar
dari 2014
2014
2015
2016 80%
2017 2013 1,4 miliar
dari 2013
Over the last four years, cheque and bilyet giro (BG) Card payment have increased by 81% in the last five
1 2 years.
use have dropped by 30%
0.50
Consumption 0.00
0.06
0.05
0.45
0.00 Electronic Money/HH 0.05
0.00 Consumption
0.05
0.05
0.40 0.00
Over the last 10 years, the use of card payment and electronic money have increased. Additionally, the use of cash with
denomination <Rp 50000 has decreased.
Ref: Bank Indonesia
9
Fintech Landscape in Indonesia
Growth of FinTech market in Indonesia shows an upward trend, in term of transaction value and number of
startups
Forecasted Actor
Transaction value (Growing by 34.29%)**
(Increasing by 22%)*
2018 2017
2017 2016
17.7 B 21.6 B 140 188
*Transaction Value
99% are related to digital payment, 0.11% to
personal finance and 0.08% to Business Finance
Projection of transaction value (statista, 2018)
AGENDA
Implication of Technological
02 Innovation to Economy,
Financial Stability, & Payment
System
11
Implication on Real Economy
1
Transformation of
physical markets towards
digital market
(“market place”)
BENEFIT RISK
Efficiency increase
Cost reduction Disruption to market, both
More opportunities for SMEs retail and wholesale
Closer distribution of SME Unemployment, especially
products in Advanced Economies
Accelerators of market
movement
2
3 Artificial
Intelligence in
financial sector:
Robotic
utilization in STRATEGY
algorithmic trading, manufacturing
smart financial sector National champions in Re-skilling of
advisors digital economy impacted labor
12
Implication on Financial Services
Global Player Domestic Player
BENEFIT RISK
Increase efficiency
New threats to established FIs
Supporting economy
Cyber risks
Financial inclusion
Procyclicality
Regulatory arbitrage
Contagion risks
Potentially disrupt the stability of the financial system if it grows fast, bubble burst occurs.
Financial
The risk of price volatility is high because its value is determined on the expectation of
Stability future supply and demand (speculative)
Regulatory arbitrage because transactions can be made from other countries with more
accommodative provisions.
Weak KYC, often used for illegal transactions, money laundering, illicit trade, tax evasion, terrorism
financing in violation of APU-PPT rules.
Illegal Activities Pseudonymity of the transaction mechanism causes the transactor not to be identified
Transactions faster and easier to move, even abroad and making it difficult to freeze or confiscate
criminal cases.
Consumer No regulation has been set that regulates virtual currency increasing user exposure to financial losses.
protection There is no clear manager so it is difficult to hold accountable when problems occur
13
14
Implication on Cross-Border Transaction
03 Policiy Responses
Policy Response - BI Regulation and Initiatives
Financial Regulation on Regulation on Regulation on Regulation on Regulatory
Technology Payment Transaction National Payment AML/CFT for Financial Sandbox
Office Processing Gateway Non-Bank FI Technology
Nov 2016 Des 2016 Jul 2017 Sept 2017 Nov 2017 Nov 2017
The speed of technological innovation and its penetration into Payment System area demands Bank
Indonesia to take a precise and appropriate policy response to ensure sustainable innovation within
prudential corridors. In addition for expanding variation of business models, innovation in the Payment
System also nurtures new fintech entrants, including e-commerce.
16
NPG in Brief
SECURE
EFFICIENT
RELIABLE
•
•
•
•
•
18
Going Forward
Developing of QR Code Standard