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Regulatory Sandbox for Fintech Operators in Indonesia

posted 8 months ago

Digital Financial Innovation/Inovasi Keuangan Digital (“IKD”) also known as technological innovation in the financial sector among others include aggregators, credit scoring, financing agent, transaction authentication, financial planner, electronic–know–your–customer (E-KYC), reg-tech-eSign, etc., have experienced rapid advancements. However, it is crucial to mitigate the disruptive effects of digital technology to maintain stability in a country’s financial system, economy, and consumer personal data protection.

To address this, the Financial Services Authority (OJK) has implemented measures to mitigate the risks associated with IKD. The Financial Services Authority/Otoritas Jasa Keuangan (“OJK”) has issued the OJK Regulation Number 13/POJK.02/2018 of 2018, which focuses on Digital Financial Innovation in the Financial Services Sector (“POJK 13/2018”). These regulations aim to create a controlled environment for testing new financial technologies while minimizing potential disruptions to the financial system and economy with a maximum trial period of 1 year and 6 months.

Overview of OJK’s Regulatory Sandbox
Based on PADG 19/2017, a Regulatory Sandbox is defined as a limited safe trial space to test Financial Technology Operators and their products, services, technology, and/or business models. Meanwhile, according to Article 1 of POJK 13/2018, Regulatory Sandbox is a testing mechanism carried out by the OJK to assess the reliability of business processes, business models, financial instruments, and governance of the Operator.

So, it can be understood that the Regulatory Sandbox is a selection process by the competent authority for the concept of technological innovation in the financial sector to be offered by a fintech which must fulfill certain requirements and compliances during the specified period.

Implementation of OJK’s Regulatory Sandbox
Implementation of Regulatory Sandbox by OJK is carried out for IKD Operators. IKD Operators in question are Financial Services Institutions that have financial service activities in the banking sector, capital market, insurance, pension funds, financing, and other financial institutions. [1] IKD must be innovative and use information technology as the main means of providing financial services to consumers. By Article 4 POJK 13/2018, the implementation of a regulatory sandbox under the OJK is carried out to ensure that all IKD operators meet the following criteria:[2]

– Be innovative and future-oriented;
– Using information and communication technology as the main means of providing services to consumers in the financial services sector;
– Supporting financial inclusion and literacy;
– Useful and can be used widely;
– Can be integrated into existing financial services;
– Using a collaborative approach; and
– Take into account the aspects of consumer protection and data protection.

a. To be registered as IKD, Operators at least fulfill the following requirements:

be registered as IKDs within the Financial Services Authority or based on an application submitted by the relevant supervisory working unit at the Financial Services Authority;
– are a new business model;
– has a business scale with a wide coverage of the market;
– be registered at an association of Operators; and
– other criteria set out by the Financial Services Authority.

b. Implementation of the Regulatory Sandbox under OJK is carried out within a maximum period of 1 (one) year and can be extended for 6 (six) months if necessary. [3]

Result of Implementation of OJK’s Regulatory Sandbox
The results of the implementation of the Regulatory Sandbox by the OJK for the Operators will be stated with the following status: [4]


IKD Operator with recommended status will be given a recommendation for registration by OJK. Such Operators must submit an application for registration to the OJK no later than 6 (six) months after the recommendation status is determined, or the registration recommendation status will be revoked and declared invalid;

Need Improvement:

For operators with repair status, OJK can give time for the Operator to make improvements no later than 6 (six) months from the date of determination; or

Not Recommended:

If the status results are not recommended, the Operator cannot re-submit the same IKD and is removed from the record as the Operator.

Regulatory Sandbox issued by OJK serves multiple purposes, not only as a policy supporting fintech innovation and future readiness but also as a means of safeguarding consumers and the broader community. It not only enhances user trust and confidence but also acts as a magnet for investors seeking investment opportunities.

[1] Article 1 number 2 POJK 13/2018

[2] Article 2 POJK 13/2018

[3] Article 9 POJK 13/2018

[4] Article 11 – 14 POJK 13/2018


– Regulation of Members of the Board of Governors Number: 19/14/PADG/2017 of 2017 concerning the Limited Technology Testing Room (Regulatory Sandbox) Financial Technology
– Regulation of The Financial Services Authority of The Republic Of Indonesia Number 13/POJK.02/2018 of 2018 concerning Digital Financial Innovations Within The Financial Services Sector

This article has been contributed by Jodi Hizkia Hutagalung of Armila Rako, a corporate law firm based in Jakarta. The above article does not, and is not intended to, constitute legal advice; instead, this article is for general informational purposes only. Information contained in this article may not constitute the most up-to-date legal or other information. Should the readers have any inquiries, readers can contact the authors at [email protected] Any reliance on this article is at the user’s own risk.



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