FINANCIAL

TECHNOLOGY:
TECHNOLOGY INNOVATIONS HAD AN IMPACT TO MANY INDUSTRIES, SUCH AS MEDIA, FILM,
MUSIC, TELECOMMUNICATIONS, COMMERCE, TRANSPORTATION.
 BENEFITS TO CONSUMERS
Change of More choices of products
Business Model Better quality of services
TECHNOLOGY Lower prices

BENEFITS TO PLAYERS

FINTECH Shortening transaction chain

Capital efficiency and operational
resilience
Supporting financial inclusion
FINANCIAL Smothering information flow
SERVICES
Less Barrier
to Entry BENEFITS TO THE ECONOMY
Supporting economy policy
transmission
FINTECH IS A FUSION BETWEEN… Increasing money velocity
Supporting economy growth
 5
FinTech and Financial Services
Fact: Technology Creates Solid Foundations for Innovation
to Improve Financial Services…

FINANCIAL MANAGE GET

PAY SAVE BORROW
SERVICES RISKS ADVICE

Distributed Smart App

Machine
INNOVATIONS learning, Ledger (incl.
Blockchain)
Contracts,
Biometrics
Program
Interfaces
predictive
(APIs),
analytics
Digital
Wallet

Cloud Authentification, Mobile Access,

AI, Big Data
FOUNDATIONS Computing Cryptography Advanced Sensors

Sumber: IMF Report (2017)

FINTECH IS…

… INNOVATION SHIFTING
 7
Potential Opportunities and Emerging Risks
The increasing role of FinTech in the financial system that can enhance efficiency and financial inclusion could ultimately
push economic growth and change the landscape of the financial system. In the same token, accompanying risks need to
be anticipated…
Changes in
landscape of
financial system

Formal
Financial
Institution

• More efficiency
and higher growth
• New risks and
vulnerabilities

Despite huge opportunities, risks will emerge if: (i) FinTech grows in interconnectivity and thus more systemic;
(ii) FinTech exacerbates unindentified activities (shadow economy)
 8
Potential Opportunities and Emerging Risks
The rapid development of FinTech can create risks in both micro and macro dimensions...

FinTech RISK MAPPING

MICRO RISKS MACRO RISKS

Contagion Risk
Financial Risks Operational Risks

Procyclicality
 Maturity
 Governance/
Mismatch
Process Management
 Liquidity Excess Volatility
 Cyber Attack
Mismatch
 Third Party Reliance
 Leverage
 Legal/Regulatory Risk
 Business Risk Too Big Too Fail
 Implikasi TekFin pada Fungsi Universal Bank
Layanan TekFin cenderung mendisagregasi fungsi universal bank…
Kategori TekFin yang
LAYANAN BANK LAYANAN TekFin mendisrupt
Digital Wallets, eMoney, Payment Clearing and
Payment Services
Cross-border payments Settlement

Aggregators, comparison & Market Provisioning

UNIVERSAL BANK

Customer Relationship switching tools, robo advisors

Peer to peer lending, big Deposit, Lending and

Retail and Commercial Banking data analytics, receivables Capital Raising

High frequency trading, Investment, and Risk

Wholesale banking, markets algorithms Management

Wholesale payments, clearing and settlement Distributed Ledger Supporting Technology

infrastructure 9
Sumber: BoE, diolah
Bank Indonesia’s Approach
Bank Indonesia responded to FinTech challenges by encouraging innovation while maintaining stability...

INNOVATION STABILITY
1. Maintain monetary stability
1. Promote innovation in the 2. Maintain financial system stability
financial sector 3. Maintain a secure, smooth and Required:
Required: 2. Boost economic growth utilizing efficient payment system Tools to observe
Controlled digital technology developments
4. Mitigate risks and encourage
environment in FinTech
consumer protection
for innovative
products
Balancing Innovation &
Stability

FinTech REGULATION
 11
Challenges for Future of Finance
Although the trend of the digital economy continues to grow and provide enormous benefits for
economy and society, some challenges remain to be solved.

1 2 3

INTERNET ACCESS AND DATA AND PRIVACY

GOVERNANCE CYBERSECURITY

4 5 6

SKILL, COMPETENCY AND POLICY MAKING IN DIGITAL ERA AUTHORITY HARMONY

INFRASTRUCTURE GAPS
 Tantangan Otoritas Merespons TekFin
Selain tantangan untuk memitigasi risiko, periode perubahan yang semakin cepat akibat munculnya
inovasi menyebabkan response time otoritas untuk membuat kebijakan semakin sempit…

Teknologi merupakan driver

50 Th utama dari perkembangan
produk layanan keuangan…

38 Th Technology
Adoption Rate IMPLIKASI

22 Th
Semakin singkatnya
14 Th Periode Perubahan
7 Th berimbas pada
3 Th
2 Th response time otoritas
menjadi lebih sempit

Telepon Radio TV PC Internet Ipod Facebook

*Brett King, Bank 3.0
12
*Samir Desai, Co-founder & CEO, Funding Circle
 14
Strategic Issues
Regulators / Authorities should understand the basic potential of fintech risk, focus on risk mitigation, and have
the ability to respond appropriately when the potential risk becomes reality (once the risk becomes relevant)

Strategic Issues Regulatory Challenges

The fast-growing financial technology sector could

hold big "systemic risks" for the banking sector and Human
the broader economy Capital
Authority
Harmony
Sandbox
focus more intensely on regulation and prudential
requirements and ensure a "more disciplined
management of operational and cyber risks" GAP
How to Find
how suitable existing rules are for addressing Joint Balance? Database
"fintech" risks Supervision FinTech

New Supervisory Approach

Sharing & Big Data
Storing
 FinTech Ecosystem 15

Indonesia needs to create a FinTech ecosystem that promotes innovation..

Encourage digital economy literacy as well as creating a Create regulations that support growth in Financial
talented FinTech Community Technology, and protect customers

ACADEMICS & BI, PEMERINTAH &

Consolidate the existing Provide capital and view
Financial Services’ business
RESEARCH OTORITAS Financial Technology as a
models INSTITUTIONS viable instrument

START-UPS INVESTOR
FinTech
Ecosystem

Use FinTech services to Synergize or

explore new financial Compete with
services for both FinTech providers
corporate and retail
customers
Provide tools for big companies to
work alongside talented FinTech
Provide Technological support
providers
(Hardware/Software)
Source: KPMG (2016) TECH VENDORS INCUBATOR, ACCELERATOR & INNOVATION
| 15 LAB
 Bank Indonesia’s Initiatives
Regulation on Meet Regulation on Regulation on
FinTech Payment Transaction the AML/CFT for Financial Regulatory
Office Processing Startup Non-Bank FI Technology Sandbox

Nov 2016 Des 2016 Nov 2016 Sept 2017 Oct 2017* Oct 2017*

Facilitator Business intelligence Assessment Coordination & Communication

for innovative ideas in regard provides regular analysis and updates in regard monitors and assesses the potential maintains a close coordination and communication with
with FinTech development in with FinTech through research and initiatives in benefit as well as the risks arising other authorities to support the existence of FinTech
Indonesia collaboration with authorities and international from new business model or ecosystem through regulation harmonization as well as
agencies products innovation to educate public including FinTech players
Thank You