Fintech and Consumer Protection in Indonesia

Transcription

1 Fintech and Consumer Protection in Indonesia SARJITO DEPUTY COMMISSIONER OF FINANCIAL EDUCATION AND CONSUMER PROTECTION FinTech, Islamic Finance and Regulatory Issues 3 rd Annual Islamic Finance Conference Makassar, 2018

2 Indonesia at a glance million million Fintech Market Only 36% adults have an account in formal financial insptupons Popula2on Source: Ind. StaPsPcs Bureau, 2017 #4 out of 216 countries Source: MiniwaVs MarkePng Group 2017 Internet users In 2017 Source: Ind. Internet Service Ass., million mobile subscrippon (126% populapon) There are more than 50 million SMEs in Indonesia and 70% of all SME sectors do not yet have access to financing through banks ±1000 trilion IDR gap financing Source: OJK Fintech Companies Growth < Approx. 235 Fintech companies in Fintech companies registered as full member of Indonesia s Fintech AssociaPon : 148 startup and 26 formal financial insptupons Source: Indonesia Fintech AssociaPon and OJK 2

3 Indonesia at a glance (cont d) 60% financing acpvity in Indonesia is concentrated in Java Indonesians 48% of the adult populapon had ever taken a loan, access to credit through formal financial services. Indonesians tend to borrow money from friends, family, neighbor or informal moneylender Indonesia has high Intermediary Cost and loans rates In South East Asia Countries Source: The Financial Inclusion Org. Singapore Malaysia Thailand Vietnam Philippines Indonesia Banking Loans Rates 1.85% 4.75% 12% 6.49% 5.50% 10.25% Source: Deposits Org. 3

4 The Rise of Peer-to-Peer Lending Peer- to- peer (P2P) lending is a method of debt financing that enables individuals to borrow and lend money without the use of an official financial insptupon as an intermediary. 51 start- up related to financial services has registered in OJK (Peer- to- peer Lending)* There are convenponal and islamic/sharia Fintech lending companies : a) 49 convenponal (registered) b) 1 Sharia (registered) c) 1 convenponal (licensed) Borrower P2P Plagorm Lender *Source : OJK Data per May 2018

5 Fintech Lending Opportunities and Challenges 01 Support Goverment of Indonesia s Inclusion Program Low financial literay index Huge potenpal numbers of foreign lenders 04 Contribute Indonesians financing acpvipes PotenPal collaborapon with banking credit, microfinance company, financing company and venture capital VS Wide range of Indonesia market (archipelagic geography of Indonesia) Illegal investment scams via online channel Loan Shark pracsces

6 Loan Shark & P2P Lending Loan Shark : a moneylender who charges extremely high rates of interest, typically under illegal condipons. Unregulated High Interest Rates (up to 33% per months or ±400% per annum*) Uncontrollable Debt CollecPon Methods *Source : Indonesian Street Vendors AssociaPon (APKLI) Peer- to- Peer Lending Regulated by OJK Indonesia Fintech AssociaPon will implement Code of Conduct for Fintech Lending companies soon. Code of Conduct consists of : 1. Disclosure 2. PrevenPon of Excessive Debt 3. Fair PracPces 4. Good Faith Principles 5. Consumer ProtecPon aspects Various rate of interest depends on products and risks 6

7 Indonesia Fintech Lending Products ASPECT SMEs Financing Microfinance Personal Loan Interest Rate 5% - 30% per annum (eff) 15% - 60% per annum (eff) Loan Amount Up to IDR 2 Billion Average < IDR 15 Million, but may up to IDR 50 Million Tenor 1 month- 24 months, MulP- purpose: 15% - 60% per annum (eff) Property: 17%- 30% (eff) MulP- purpose: 5-25 Million Property: Up to IDR 2 Billion 1-12 months MulP- purpose: 12 months Property: up to 38 months Short- Term Micro Loan Daily Interest (1% per day) < IDR 25 Million Daily up to 2 months Source : Indonesia Fintech AssociaPon 7

8 Consumer Protection Aspects In OJK regulation on Fintech P2P Lending OJK RegulaSon No. 77/POJK.01/2016 concerning InformaSon Technology- Based Lending Services Must comply with Consumer ProtecSon Principles : 1. Transparency 2. Fair Treatment 3. Reliability 4. Secrecy and Data Security 5. Simple and Quick Dispute ResoluPon at Affordable Cost Must provide accurate, clear and not misleading products/services informapon Supports acpvipes to increase financial literacy and inclusion Pay avenpon to consumer suitability and capability ObligaPon to submit complaints handling report to OJK 8

9 Current Development on Consumer Protection of Fintech in Indonesia OJK inaugurated the Fintech Advisory Forum and engages closely with relevant stakeholders OJK with the Investment Fraud Task Force has suspended several companies indicated as illegal investment operapon most of them use digital channel to promote their services OJK supports financial consumer literacy & educapon acpvipes OJK conducted Market Conduct Supervision to several Fintech companies 9

10 OJK Market Conduct Supervision Market Intelligence OperaSon found several risks related to Fintech services : Consumer data and informason loss (cybersecurity) Standard Contract and (Use of exonerate clause, imbalance contract) Lack of transparency and informason (misleading, unclear informapon) System Reliability (System failure) Less- human intermediary involved (may be a challenge to low financial literacy index) 10

11 Thank You 11