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Open Banking

The world’s largest archipelagic state sits at the meeting point of the Pacific and Indian Oceans.

In 2020, Indonesia’s internet penetration was 70%. Being a nation made up of island communities, mobile banking is an opportunity, with smartphone penetration at 75%.

In 2019, Bank Indonesia (BI) released its Indonesia Payment Systems Blueprint 2025 with Open Banking as its first aim. Open Banking standards have been developed and are expected to be adopted by most banks in 2022.

Prior to the publication of the banking standards, there was a lack of interoperability between e-commerce and payment systems. The aim is for the APIs to eliminate that. In 2021, the BI and the Bank of Thailand piloted cross-border QR payments . Similar testing was planned with Malaysia. 

52% of adults in Indonesia had bank accounts in 2021, leaving 48% unbanked.

Indonesia is aware of the technical challenges its population creates, being spread across 89,931 villages and 17,504 islands. The World Bank, in a 2021 report, suggests that the sharing of telecom infrastructure is necessary. It noted that in 2019% of Indonesian adults in urban areas were connected to the internet compared to 36% in rural areas, while it was 20% and 6% respectively in 2011. 

The Personal Data Protection Act was submitted in draft form in 2020, emphasising the need for explicit consent for the sharing of data and monetary penalties for breaches.

Singapore’s Open Finance approach and super apps are targeting Indonesia, with Singapore-based Sea Group acquiring Bank Kesejahteraan Ekonomi (Bank BKE) in 2021. The online shopping arm of Sea was Indonesia’s biggest online shopping platform. A bank license is key to accessing Indonesia’s financial services market. Japanese and Chinese companies have also made big acquisitions or are developing digital banking platforms: Indonesia is relatively relaxed about foreign access to their domestic financial industry. As yet, these super apps are not using Open Banking standards for their digital payment systems.

The World Bank projects a shortage of 9 million skilled and semi-skilled ICT workers by 2030. The Ministry of Communications and Information have an Online Academy Program for people to take digital skills training.

Indonesia ranked 47th out of 134 countries in Wiley’s Digital Skills Global Index 2021

Indonesia launched their set of standards for Open Banking- SNAP- in 2021.  The standards involve balance information, transaction history, credit transfer and debit transfer.