Indonesia’s central bank to revamps regulations to create fintech development sandbox

New technologies will facilitate transformations in banking in Indonesia before 2025.

Indonesia’s central bank (BI) plans to reshape its regulatory sandbox scheme into a development sandbox for fintech payments in the near future, BI governor Perry Warjiyo said on Monday at the Fintech Summit & Expo 2019 in Jakarta.

Under the current rules, fintech companies that handle payments must fulfill several requirements in the regulatory sandbox phase before they are granted full licenses. The key conditions are to guarantee consumer protection and submit test reports. But after the changes that Wajiyo mentioned kick in, BI will align its rules with the government’s vision of revamping Indonesia’s payment system by 2025, integrating fintech services with banks and the government to advance the digital economy and financial inclusion in the country.

“The focus is expanded. In the regulatory sandbox, innovation should be linked with regulation. Later, the developer sandbox will open up and give free space for fintech firms to produce innovations as long as there are benefits and risks are under control,” Onny Wijanarko, executive director in BI’s communication department told KrASIA. A detailed timeline for the rules’ shift has not been disclosed.

Wijanarko pointed out that some of the technologies that fintech firms will adopt are biometric and facial recognition, which can be part of the implementation of know-your-customer processes as well as counter money laundering or terrorism financing.

Additionally, open banking and the adoption of new technologies will cement banks as the main institutions in the digital financial economy. Another goal is to eliminate shadow banking.