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Indonesia's fintech sector has been very active in the past year despite the Covid-19 pandemic. In fact, it may even be said that the pandemic has given Indonesia’s fintech sector an even bigger push as more people turn to digital solutions to carry out their daily activities. Businesses have accelerated their adoption of technology to adapt to, and survive in, the “new normal”. E-commerce transaction volumes have also increased exponentially, contributing to the increased use of digital payments and online lending platforms.
To secure their place in Indonesia’s growing digital economy, fintech players from financial institutions to digital platforms have been carrying out a range of activities. These include fundraising, bolt-on acquisitions to expand their offerings, entering commercial collaborations with other players, and even exploring consolidation options by merging with competitors.
The regulators have also become more alive to the relevant issues in the sector as well as the potential pitfalls. They have therefore updated the fintech regulatory framework by updating existing regulations and issuing new ones, and by preparing several draft regulations currently under consultation. These include regulations on peer-to-peer lending, payments, equity crowdfunding and digital banking.
As always, the key would be to strike a balance between protecting customers and preventing an adverse impact on the country’s economy (in particular, the potential systemic risks that the fintech sector may pose to the broader economy) on the one hand, while still encouraging innovation and ensuring that the businesses continue to be agile on the other hand.
To download our article on Fintech Trends and Developments in 2021, published by Chambers and Partners, please click on the button below.