Indonesia's financial regulator is taking a leaf out of near neighbor Singapore's book in preparing to embrace financial technology.
The Financial Services Authority of Indonesia, Otoritas Jasa Keuangan or OJK, will launch a financial technology center in Jakarta next month, Indonesian news agency «Kompas» reports. The move is meant to foster digital innovation and development.
While Indonesia undeniably has huge potential for fintech firms, it lags far behind Hong Kong and Singapore in the nascent technology. By contrast, both of Asia's leading financial centers can claim to be thriving and open financial hubs after plowing substantial funding into creating fintech ecosystems and establishing talent pipelines.
Unbanked and Millennials
Indonesia wants to change that: Fintech has developed so rapidly in Indonesia the sector now needs further support from the government, according to Triyono Gani, OJK's head of digital finance innovation and microfinance development. The overseer will also introduce a new set of regulations covering the financial technology sector.
Indonesia's population of more than 260 million represents a sizable opportunity for the fintech industry: only 36 percent of the population are connected to financial institutions, leaving in the region of 150 million citizens unbanked.
Financial technology startups in Indonesia have been quick to address the needs of the country's millennials, where traditional banks are falling short. Millennials are projected to account for around 58 percent of Indonesia's total population by 2027.
