BASIC

14
Teguh Budiarto

MANAGEMENT

FKKPM-FEB, UNIVERSITAS GADJAH MADA

JOGJAKARTA -INDONESIA
2022
 BASIC MANAGEMENT
1 Introduction
2 Manager & Management JG Ch.1, 2
3 Planning Plan JG Ch.7, 8
4 Structure & Control Organization JG Ch.10, 11
5 Leading, Motivating & Communicating JG Ch.13, 14
6 Conflict & Change Management JG Ch.16
7 Human Resource Management JG Ch.12
8 Basic Business FHF Ch.1
9 Managing Business FHF Ch.17
10 Basic Operations FHF Ch. 8
11 Basic Marketing FHF Ch.11, 12, 13
12 Financial Operations FHF Ch.14, 15, 16
13 Business Ethics & Sustainability FHF Ch.2
14 Global & Digital Business FHF Ch.3

• Jones, G.R. & George, J.M., 2020, Contemporary Management, McGraw Hill, New York, 11thed. (JG)
• Ferrell, O.C., Geoffrey Hirt & Linda Ferrell, 2020, Business Foundations: a changing World, McGraw Hill Irwin, 12thed. (FHF)
 MANAGEment Ways
Defining
Goals
1 Planning

2 Organizing
Coordinating
Choosing Setting Communicating
Strategy Structure Motivating
Leading

Setting 3
Information
Evaluating
Performance
Controll
Mechanism Controlling
System
Teguh Budiarto
1 Global
1.
Business
International Business
2. Global Business
3. GloCal Business
InterNational Business
 International Business
is business whose activities involve
crossing national borders.

Batman returns to Global

International Business
Ways
Local
Business Local
B Business
AB

Jo
nti
Local

Ve
nt
Market

ur
e
B
Foreign
Business
A branch
t m e nt
I n ve s
International n Di rect
Business Foreig
A

Nation A Nation B
Home Country Destination Country
International Business
Types
1. Multi National Business
2. Global Business
3. GloCal Business
1. Multi National Company
Multi National Company (MNC), or
Multinational enterprise (MNE)
is an international firm doing business
in more than one countries differently.
Multi National
Nation B
Corporation Nation C
Foreign
Market Foreign
Market

Nation A
Nation D
HQ
MNC Foreign
Market
Global Business
Global Company
Global Company or Global Business
is an organization that attempts to:
•Have a worldwide operation
•Standardize operation worldwide in one or
more of the functional areas
•Integrate its operations worldwide
Global Nation B

Business Nation C

Foreign
Market
Foreign
Market

Global
Market
Nation A

Nation D
HQ
GC
Foreign
Market
Global Concept
Global concept is a system thinking that
seeing kinds of object without any view
differences.
Global Paradox
• Global Problems
• Anti Global Movements
• Adaptation & Local
Forces
Global Problems
• Cross Cultural
• Global Warming
• Economy Gap
• Global Conflicts
Anti-Global Movements

• Boycott
• Adaptation
Global Criticisms
Lack of evidence
•There has been an absolute decrease in the percentage of people in
developing countries living below $1 per day in east Asia, Sub Saharan
Africa
•The world income per head has increased by more over period 2002–2007
than during any other period on the record.
•The increase in universal suffrage, from no nations in 1900 to 62.5% of
all nations in 2000.
•There are similar trends for electric power, cars, radios, and telephones
per capita as well as the percentage of the population with access to clean
water.
Global Criticisms
Localization Forces

“think globally, act locally”

GloCal Business
 GloCal Business
Multicultural Multinational or Glocal
company is a firm:
•Trying to achieve economies of scale through
global integration its functional areal
•Being highly responsive to different local
environment
GloCal Concept
Multicultural Multinational, Dochakuka (Japan)
The ability to understand markets beyond one’s own
country-of-origin with respect to global thinking in
locally adaptation.

1. Worldwide operations
2. Global Technology basis
3. Responsive to local markets
GloCal Nation B

Business Nation C

Foreign
Market
Foreign
Global Market
Local Culture Market
Local Culture

Nation A

Nation D
HQ Local
GC Culture Foreign
Market
Is Coca-Cola a global product?
GloCal Product
Local Culture Forces
Four Basic International Business

HIGH
Global Glocal
Business Business

cost pressures

Int’l Multi
BUSINESS With
Domestic
National
Orientation Business
LOW

LOW local pressures HIGH

Hill,1997-modification
Global Business Evolution Global
Business
Regional
Glocal Business
Global
Business
Business

Geocentric Multinational
Regiocentric Business
Polycentric

Ethnocentric
Export Business
National Business International
Pre Int’l Business
Domestic Business
Business
Digital Business
1. Digital Marketing
2. Digital Operations
3. Digital Finance
Industrial Revolution 4.0

Mechanization Mass Production Automation Cyber Physical System

Steam Power Assembly line Computers Internet of Things
Weaving Loom Electrical Energy Electronics Network
Impact of The Fourth Industrial Revolution:
1. A large portion of people around the world are likely to use
social-media platforms to connect, learn, and change information.
2. A variety of innovative producers and competitors will have easy
access to digital platforms of marketing, sales, and distribution,
thereby improving the quality and price of goods and services.
3. Consumers will be more and more involved in the production and
distribution chains.
The main effects of this revolution on the business environment are
the impact it will have on consumer expectations, product quality,
the move toward collaborative innovation, and innovations in
organizational forms.
Min Xu, et al. 2018
Digital Business
is business with a people-centric view and agile
processes, whereby digital technology is used to
enable people (customers, employees, managers,
etc.) to succeed, optimize all business functions
and make your business more relevant and
profitable.
Digital Business
technology

humanity efficiency
Digital Business Model
• The added value generated would not be possible
without the use of digital technologies.
• The business model is characterized by digital business
innovation.
• Customer acquisition and distribution are based on
digital channels.
• Customers are willing to pay for the digital service or
the service.
Types of Digital Business Model
Freemium model, Customers receive parts of the digital service (e.g.
limited functions of software) free of charge. This serves to manage the
onboarding process with as little sales effort as possible. The Freemium
model follows the principle of competence standardization
Marketplace model, Digital business models that follow this model
derive their added value from the fact that a large number of
independent players are active on the marketplace and regular
transactions take place. The marketplace model can work alone or
represent the extension of an existing offer of a company. 
Using instead of buying, This digital business model enables
another form of use of an asset (e.g. software, automobile or machine).
It is no longer the possession, but the consumption or use of an asset
that is monetarized. Digital technologies make it possible to measure
consumption or usage.
 Digital
Marketing
Digital Marketing
Digital marketing is the component
of marketing that utilizes internet and online based
digital technologies such as desktop
computers, mobile phones and other digital
media and platforms to promote products and
services
Digital Marketing
Marketers need to do is integrate more data from
more devices, and will learn all they need to know.
Big data can tell what customers have done in the
past and, hence, offer predictions of what they
might do in the future.
1) creating the integrated consumer view;
2) explaining patterns; and
3) looking toward the future.
Digital Marketing
Digital marketing campaigns have become prevalent,
employing combinations of Search Engine
Optimization (SEO), Search Engine
Marketing (SEM), Sontent marketing, Influencer
marketing, Content automation, Campaign
marketing, Data-driven marketing, e-
Commerce marketing, Social media marketing, Social
media optimization, e-mail Direct marketing, Display
advertising, e–Books, and Optical disks and games.
Digital Marketing
Digital marketing extends to non-Internet channels
that provide digital media, such as television,
mobile phones (SMS and MMS), callback, and on-
hold mobile ring tones. 
The extension to non-Internet channels
differentiates digital marketing from online
marketing.
The Explosion of Data
Big Data
The Explosion of Data
Big data as digitized information and
analytical technologies which have not
been incorporated into standard
commercial business intelligence
platforms and enterprise software
system.
Big Data
is data that contains greater variety, arriving
in increasing volumes and with more
velocity. How data is being generated and
made relevant to increase business value
through profitable use of data.

The statistic shows that 500+terabytes of new data get ingested

into the databases of social media site Facebook, every day. This
data is mainly generated in terms of photo and video uploads,
message exchanges, putting comments etc.
Big Data
• Huge in volume, consisting of terabytes or petabytes of
data
• High in velocity, being created in or near real time
• Diverse in variety being structures and unstructured in
nature
• Exhaustive in scope, striving to capture entire populations
or systems
• Fine-grained in resolution, aiming to be as detailed as
possible, and unique indexical in identification
• Relational in nature, containing common fields that enable
the conjoining of different data sets
• Flexible, holding the traits of extensionality (can add new
fields easily) and scalability (can expand in size rapidly)
Big Data & Marketing Research
Online Marketing
also known as  Online advertising, Internet
advertising, digital advertising or web advertising,
is a form of marketing and advertising which uses the
Internet to deliver promotional marketing messages to
consumers. Includes Email marketing, Search engine
marketing (SEM), Social media marketing, many types
of Display advertising (including Web banner advertising),
and mobile advertising.
When software is used to do the purchasing, it is known
as Programmatic advertising.
Digital Marketing Types
Digital Marketing Types

Teguh Budiarto 52
DigiMarketing
Social Media
Social Networking Service
Digital Marketing abilities
1. Addressability: The ability for a business to identify consumers before
they make a purchase
2. Interactivity: Allows customers to express their needs and wants
directly to the firm in response to its communications
3. Accessibility: Allows consumers to find information about competing
products, prices, and reviews and to become more informed about a
firm and the relative value of its products
4. Connectivity: Keeps customers and businesses connected with each
other
5. Control: Consumers’ ability to regulate the information they receive
via the Internet
Digital Media in Business Advantages
• Fast communication
• More interactive
• Comparison shopping easier
• Easier to conduct marketing research and
advertise
Digital Media and the Marketing Mix
Digital media let marketers and
consumers share information
•Websites
•Online social media sites
•Email
•Listserves
Ways Users Spend Time on the Internet
Rank Sector Global Reach

1 Search 85.9%

2 General Interest Portals 85.2%

3 Software Manufacturers 73.4%

4 Online Communities 66.8%

5 Email 65.1%

Source: Nielson Reports, “Global Faces and Networked Places,” March 2009, p. 3
http://blog.nielsen.com/nielsenwire/wp-content/uploads/2009/03/nielsen_globalfaces_mar09.pdf.
Product Considerations
Digital media connectivity creates
opportunities to add services and benefits
to products
•Some products only available digitally
•Internet can make it easier to learn about and
anticipate consumer needs
•Competition makes quality and service offerings
more important than ever
Distribution Considerations
The Internet is a new distribution
channel
•Processing orders electronically can reduce
inefficiencies, cost and redundancies
• Can also increase speed
• Shipping times and costs are important to
customers

13-12
Type of e-Commerce
• B2B
• B2C
• C2B
• C2C
• B2A or B2G
• C2A or C2G
• B2O
• C2O
13-12
Promotion Considerations
Promotion is one of the best applications for
digital media
•Consumer consumption patterns are changing
• The products they want to buy
• The way they get information
•Marketers must react and give consumers what
they want

13-13
Price Considerations
• The most flexible element of the marketing
mix
• Digital media can enhance a product’s value
by providing service, information, and
convenience
•Discounts and sales can be quickly
communicated
•Deals websites allow consumers to compare
prices of products
13-15
Online Social Networks
• A web-based meeting place for friends, family, co-
workers and peers that lets users create a profile
and connect with others for a variety of purposes
• Build relationships with customers
• Provide product information
• Learn about customer needs
• Contact new target markets
• Starbucks, Dell, eBay and Google all excel at using
social media for marketing
13-17
Digital Media
• Digital media is a great learning tool Market research
• Gathering data on consumers
• Asking consumers about preferences
• Crowdsourcing involves using communities if
interested consumers to gather input and feedback
for marketing purposes
• Can help small businesses on limited budgets
compete with large businesses

13-33
Social Media
Social media is a computer-based
technology that facilitates the
sharing of ideas, thoughts, and
information through the building
of virtual networks and
communities. By design, social Social
media is Internet-based and Media
gives users quick electronic
communication of content.
Content includes personal
information, documents, videos,
and photos. 
e-Commerce
is a business model that
lets firms and individuals
buy and sell things over
the internet. E-commerce
operates in all four of the Social
following major market Media
segments:
• Business to business
• Business to consumer
• Consumer to consumer
• Consumer to business
e-Commerce
 e-Commerce 2021

Sumber:www.grahanurdian.com
Digital Media Change Marketing
Digital media make more efficient and productive
• Transition to digital media can be challenging
• Correct blend of traditional and digital media in
marketing mix takes time and consideration
• Future marketing opportunities will require a
knowledge of digital media and how to use them
Types of Consumer-Generated
Marketing and Digital Media
Factors increasing consumer-generated
information:
1.Increased tendency for consumers to publish their
thoughts, opinions and reviews of products via blogs
and other digital media
2.Consumers tend to trust other consumers over
corporations

13-18
Mobile Marketing
Consumers increasingly do their business and
shopping from mobile devices and smartphones
• Marketers can use digital media to their
advantage
• Requires adapting to new technologies
and consumption patterns

13-30
Legal Issues in Internet Marketing:
Privacy
• Shopping on the Internet allows companies to better
track consumers
• Cookies are often used for tracking
• Laws and regulations cannot keep up with the rapidly-
changing Internet
• Federal Trade Commission considering creating legislation
that limits information companies can gather online
• The Better Business Bureau and other organizations
can help organizations develop privacy policies 13-34
Legal Issues in Internet Marketing:
Identity Theft
• Occurs when criminals obtain personal
information that allows them to impersonate
someone else in order to access financial
accounts and make purchases
• Security breaches are serious threat to
organizations and individuals
• Phishing is using a familiar website to deceive
people into divulging private information
13-35
Main Sources of Identity Theft

Source: “Consumer Sentinel Network Databook, 2009,” The Federal Trade Commission, February 3, 2010, p. 3,
http://www.ftc.gov/sentinel/reports/sentinel-annual-reports/sentinel-cy2009.pdf (accessed May 12, 2010).
13-36
Legal Issues in Internet Marketing:
Online Fraud
• Includes any attempt to conduct fraudulent
activities online
• Cybercriminals are increasingly using online social
networking sites and other digital media to commit
fraud
• They sometimes use social networking sites to
pose as charities and collect donations
• Always be careful what information you give out
when online; and used trusted sites whenever
possible

13-37
Legal Issues in Internet Marketing:
Intellectual Property
• Intellectual property can include songs, movies,
books, electronics, software, etc.
• It is generally protected by patents and
copyrights, but these can be difficult to enforce
globally
• Piracy and illegal sharing costs global industries
billions annually
• 90% of illegal software copying is done by
businesses
FHF

13-38
 Digital
Operations
Digital Operations
Is the process center of digital transformation,
providing the systems and other resources. It
corporates mechanisms for sensing and responding,
while potentially supporting dynamic learning and
optimization.
Digi Operations is digitizing and integrating processes
vertically across the entire organization, from product
development and purchasing, through to
manufacturing, logistic and service.
Digital Operations ways
1. Removing the kinds of operating model
inefficiencies
2. Using intelligent process automation (IPA)
to empower the workforce, 
3. Refocusing scarce resources to grow at
scale and speed.

https://www.cognizant.com/us/en/glossary/digital-operations
Intelligent Process Automation
(IPA)
is an application of Artificial Intellegence and
collection of technologies that come together to
manage, automate and integrate digital processes,
including Computer Vision, Cognitive automation
and Machine Learning to Robotic Process
Automation.

IPA combines robotic process automation (RPA) and

machine learning
https://www.bizagi.com/en/blog/intelligent-process-automation/
Robotic Process Automation
(RPA)
is a software technology that makes it easy to build,
deploy, and manage software robots that emulate
humans actions interacting with digital systems and
software.  RPA is a form of business process
automation technology based on
metaphorical software robots (bots) or on artificial
intelligence (AI)/digital workers.

https://www.uipath.com/rpa/robotic-process-automation
Robotic Process Automation
RPA is used for automating the current workflows with the help
of robots to reduce human intervention at every point. It provides
automation for time consuming and repetitive manual activities
and helps in offering high degree of accuracy and predictability

Robotic: Machines that mimics the human activities and actions are

called as robots.
Process: Sequence of steps which is used to perform a particular task.
Automation: Any process which is done by robot without any human
intervention and provides high degree of accuracy.
RPA actual use
• Banking and Finance Process Automation
• Mortgage and Lending Process
• Customer Care Automation
• e-Commerce Merchandising Operation
• OCR Application
• Data Extraction Process
• Fixed automation process
Robotics Technology
Robotics, design, construction, and use of machines
(robots) to perform tasks done traditionally
by human beings.
Robots are widely used in such industries as
automobile manufacture to perform simple repetitive
tasks, and in industries where work must be
performed in environments hazardous to humans.

Today’s industrial robots do not resemble human

beings; a robot in human form is called an android. 
Industrial
Robotics
Digital Services
The term Digital Services refers to the electronic
delivery of information including data and content
across multiple platforms and devices like web or
mobile.
Information is presented in a way that is easy to
use and understand and typically involves
transactional services such as submitting forms for
processing and receiving benefits. 
 Digital
Services
 Digital
Hospital
Smart Manufacturing
Smart Manufacturing uses digitisation of data
to help factories transition into agile and
distributed model to increase factorynefficiency
and asset performance and extend asset life.
Digital government services
also called e-government are defined as service
delivery within government - as well as between
government and the public - using information
and communication technologies.

Common digital services range from filling tax

returns to renewing a driver’s license to applying
for a pet license. Nearly any government form or
service can be offered digitally.
 Digital
Finance
Democratization of Data
Digital Finance
Is innovative ideas  that improve financial service processes
by proposing technology solutions according to different
business situations, which individuals and companies can have
access to payments, savings, and credit products without ever
stepping into a bank branch. This is possible through
digitization, which can essentially turn a smartphone into a
wallet, a checkbook, a bank branch, and an accounting
ledger, all in one.
Financial Digitization is the process of storing, converting,
processing or transferring financial information in a format
recognized by computers.
Innovation Technology in
Finance
• Digital banking
• Fintech
• Blockchain
• AI and Machine Learning
• Big Data
• Automation
• FNT
Digital Banking
Before, banks used to offer incentives for opening an
account. They also gave customers promises such as
no fees, low fees, free checking, or cashback. But
now, these features are all offered and expected in
digital banking. Banks or credit card companies come
with an associated mobile app for their customers to
access their accounts online, pay bills and track their
expenses.
Fintech
Fintech refers to financial institutions and banks that
are looking to make full use of available systems,
hardware and software capabilities. Today, it is used
for digital banking technologies such as digital wallets,
banks, blockchain tech, and more. Fintech is changing
the landscape of financial services in many ways
through spending tracker, online budgeting tools, and
even automated chatbots for customer service.
Aplikasi Dompet Digital
Di Indonesia
Blockchain Technology
Blockchain technology is a type of distributed ledger that
provides a decentralized transactional database, or so-
called “digital ledger of transactions” that is shared by
everyone on the blockchain network.

On the blockchain, transactions are recorded

chronologically, and each block becomes an
unchangeable locked historical record that is linked to
previous and future blocks or transactions.
Smart Contract
is a self-executing contract with the terms of the agreement
between buyer and seller being directly written into lines of code.
The code and the agreements contained therein exist across a
distributed, decentralized blockchain network. 

https://academy.shrimpy.io/post/the-best-smart-contract-platforms
Blockchain Process Steps
Crypto-asset
as private digital assets that use cryptography and are
designed to work as a medium of exchange.
A crypto asset (cryptocurrency) is part of digital currencies
(all electronic money). Examples of crypto assets
(cryptocurrencies) are bitcoin and ethereum.

Digital currencies are intangible e-money, sometimes

regulated, sometimes unregulated. Examples of digital
currencies are Paypal or virtual game money.

https://request.network/en/academy/what-is-a-crypto-asset/
Bitcoin 
Bitcoin is a cryptocurrency, or unregulated digital currency,
created and held electronically. No one controls the currency
or sees it — it is decentralized, so no person, institution or
bank holds it. Bitcoin was first introduced in 2008, when
“Satoshi Nakamoto”
Bitcoin can be used to buy things. In that sense, it is like
conventional dollars, euros or yen, which are also traded
digitally.
Bitcoin’s most important characteristic, however, and what
differentiates it from conventional money, is it is decentralized.
Bitcoin is controlled by a transactional ledger that is based on
the functional operating system called blockchain technology.  
AI and Machine Learning
Banks and credit card companies are using AI and
machine learning to detect fraudulent activity.
Using complex algorithms, the AI program can
detect suspicious activity and take action within
seconds. These technologies help protect mobile
banking, login credentials, and other sensitive
data or information.
Big Data
Big data in finance refers to the petabytes of structured
and unstructured data that can be used to anticipate
customer behaviors and create strategies for banks and
financial institutions.
There are many different data-driven analysis methods
that can be performed on these datasets in order to
optimize business growth, e.g. real-time analytics,
customer analytics, and predictive analytics.
Big Data
• Variety is the different data types processed. Banks have to
deal with huge numbers of various types of data day in and
day out. From transaction details to credit scores and risk
assessment reports, the banks have troves of customer data.
• Volume is the space that the data will take to store. Giant
financial institutions like the JPMorgan Chase., China
Construction Bank Corporation, and BNP Paribas, etc.
generate terabytes of data daily.
• Velocity is the speed of adding new data to the database.
With the volumes that the banks of today work on, handling
1000+tranactions is not a hypothetical figure
Automation
Automation is a term for technology applications
where human input is minimized.
This includes business process automation (BPA), IT
automation, personal applications such as home
automation and more.
•Basic Automation
•Process Automation
•Integration Automation
•AI Automation
Non Fungible Tokens (NFT)
NFTs are tokens that we can use to
represent ownership of unique items.
They let us tokenise things like art,
collectibles, even real estate.

They can only have one official owner

at a time and they're secured by the
Ethereum blockchain – no one can
modify the record of ownership or
copy/paste a new NFT into existence.
Financial Institutions:
1. Central Banks
2. Retail & Commercial Banks
3. Internet Banks
4. Credit Unions
5. Savings and Loans Associations
6. Investment Banks & Company
7. Brokerage Firms
8. Insurance Companies
9. Mortgage Companies
Fintech Market in Indonesia by Category, April 2020
Glossary
• Artificial intelligence—information technology (IT) systems that perform functions requiring
human capabilities, such as asking questions, discovering and testing hypotheses, and making
decisions automatically based on advanced analytics operating on extensive data sets
• Application programming interfaces—a set of rules and specifications followed by software
programs to communicate with each other, forming an interface between different software
programs that facilitates their interaction
• Big data—the massive volume of data that is generated by the increasing use of digital tools
and information systems
• Big Tech—technology companies with an established presence in the market for digital
services
• Biometrics—automated recognition of individuals based on their biological attributes and/or
behavioral characteristics, such as a fingerprint, handprint, voice, or signature, which is used
for identification and authentication purposes
• Blockchain—a type of distributed ledger that uses independent computers (referred to as
nodes) to record, share, and synchronize transactions in their respective electronic ledgers
(instead of keeping data centralized as in a traditional ledger); blockchain organizes data into
blocks, which are chained together in an append only mode
• Cloud computing—the practice of using a network of remote servers to store, manage, and
process data
Crowdfunding—an activity whereby investors provide capital to private companies in the
form of grants, equity investments, or loans, with intermediation between investors and
companies seeking capital taking place on digital platforms in exchange for a percentage of
the capital placed or a fee
Crypto assets—a broad term designating all assets stored on distributed ledgers, including
cryptocurrencies and non-currency assets such as security tokens and utility tokens
Cyberattack—when a computer system or component is the object of a crime (hacking,
phishing, spamming) or facilitates the perpetration of a crime (such as theft of information or
money)
Cyber resilience—a financial market infrastructure’s ability to anticipate, withstand, contain,
and rapidly recover from a cyberattack
Digital banks—deposit-taking institutions that are members of a deposit insurance scheme
and deliver banking services primarily through electronic channels instead of physical
branches
Digital identity—an amalgamation of all information available online that bind a persona to a
physical person, including social network profiles, device information, location, and search
history
Digital ID system—a system that encompasses the process of identity proofing and enrollment,
which may be digital or physical (documentary), or a combination; and authentication thereof,
which must be conducted digitally
Digital payment services—services that use technology to facilitate payment transactions by
transferring money, and clearing or settling balances digitally, without the use of physical money
Distributed ledger—technology that uses independent computers (“nodes”) to record, share, and
synchronize transactions in their respective electronic ledgers, instead of keeping data centralized
as in a traditional ledger
E-know your customer—a process by which approved entities access a digital and usually a
national ID system to authenticate or verify a customer’s identity
E-money—monetary value that is stored electronically as a receipt of funds and is used for
payment transactions
E-waqf—Muslims’ donation in the form of cash that is transacted via electronic means (e.g.,
internet banking facilities); if it is offered through internet banking facilities, online waqf is
therefore viewed as one of the services provided by Islamic banks
E-zakat—all Muslims who possess more than a certain level of wealth should contribute about
2.5% of their disposable income to eight beneficiary groups defined in the Qur’an; these
transactions may also be done electronically
Fintech balance sheet lending—a credit activity facilitated by internet-based platforms (not
operated by commercial banks) that use their own balance sheet in the ordinary course of
business to intermediate borrowers and lenders
Fintech platform financing—a funding activity facilitated by internet-based platforms (not
operated by commercial banks), including balance sheet lending, loan crowdfunding, and
equity crowdfunding
Initial coin offering—the first sale of a cryptocurrency to the public conducted for the purpose
of raising funds
Innovation accelerator—a partnership between fintech companies and central banks and/or
supervisory agencies to develop use cases that may involve funding support and/or
authorities’ endorsement and approval for future use in central banking operations, or in the
conduct of supervisory tasks
Innovation hub—a facility established by supervisory bodies designed to support, advise, or
guide regulated or unregulated firms in navigating the regulatory framework, or identifying
supervisory policy or legal issues and concerns
Insurtech—technology-enabled innovations in the insurance industry that are designed to
improve underwriting practices, lower costs, and improve the consumer experience
Machine learning—a method of designing problem-solving rules that improve automatically
through experience through the use of machine learning algorithms that give computers the
ability to learn without specifying all the knowledge a computer would need to perform a
desired task
Open banking—any initiative by a bank to open its application programming interfaces to
third parties providing access to data of the bank or access to functionality
Peer-to-peer lending—a form of direct lending whereby investors make loans to individuals or
businesses without the direct participation of a commercial lending institution using a digital
platform that takes a percentage of the loan or a fee for its services
Reg tech—a subset of fintech that uses innovative and integrated technology to facilitate the
delivery of regulatory requirements more efficiently than existing capabilities
Regulatory sandbox—a controlled testing environment, sometimes involving regulatory
forbearance and use of discretion by the supervisory agency, which may include
establishment of parameters (e.g., time restrictions) and guidelines that firms must follow
Robo-advisor—an automated or algorithm-driven tool that provides information on financial
products or services to consumers with little to no human interaction by the service provider
viii Digital Finance Innovation Road Map and Action Plan 2020-2024
Smart contract—a computer code that can automatically monitor, execute, and enforce a
legal agreement, and whereby contractual clauses and functional outcomes are mapped as
code on the distributed ledger such that transaction costs can be reduced, and contract
execution will only occur when specific performance is realized
Sup tech—the use of innovative technology by supervisory agencies to facilitate supervision,
which aids in the digitization of reporting and regulatory processes, resulting in more efficient
monitoring of risk and compliance of financial institutions
(OJK, 2020)
See you…..