OJK’s Timely Digitalization of Indonesia’s Traditional Banks
The later part of year 2019 saw an uplifting of the banking industry in Indonesia, as legislators gave banks permission to conform with digitalization trends. The Financial Services Authority of Indonesia, locally known as the Otoritas Jasa Keuangan or OJK had introduced timely amendments that allowed Indonesian banks to cope with the global shift to online banking as the new norm.
Among the changes introduced by the OJK, included giving Indonesian banks, permission to use the technology of third party service providers when conducting on-boarding face-to-face identity verification. Whereas before, Indonesian banks face-to-face verifications were limited to the capabilities of banks’ in-house electronic verification systems. A broader identity verification system is needed in order to fortify such methods, when complying with the basic Anti Money Laundering KYC policy, or the Know-Your-Client policy.
Such changes were actually expected ever since the OJK instituted guidelines for banks to follow in 2016 and 2018. The guidelines saw to the digitalization of bank branches and of banking regulations, which led to the overall digitalization of banking procedures. Subsequently, the developments have allowed banks to keep up with mobile banking Indonesian banks can now serve customers better, as customers can now open savings accounts, as well as apply for credit cards through the use of digital technology.
A Cursory Look at How Digitalization Transformed Traditional Indonesian Banks
Nonetheless, as banking institutions underwent technological developments, mostly by collaborating with fintech service providers, Indonesians have been seeing more offers of digital products and services from traditional banks.
Such products and services include the issuance of debit cards as additional mode of payment for e-commerce purchases and in paying utility bills Some Indonesian banks also introduced rewards programs as a way to encourage customers’ use of their bank’s mobile banking services.
One of the most important changes that came around as a result of the digitalization in Indonesian banks are the mobile-only, local money transfers between banks. Through the use of mobile application that works via an Application Programming Interface (API) of a third party platform, transfers of funds between different banking institutions can take effect in a matter of seconds.
Reports have it that the OKJ is still studying the digital regulations adopted by neighboring jurisdictions like Malaysia, Singapore and Hong Kong, while contemplating on the possibilities of allowing brick-and-mortar banks to fully evolve as virtual banks.
Online Gambling Also Benefited from the Digitalization of Indonesian Banks
Although Indonesia’s OJK may not like it, the digitalization of Indonesia’s banks made it possible for online gambling companies to offer faster deposit and withdrawal services to their Indonesian customers.
Since gambling is illegal in Indonesia, online casinos and sportsbook operators are unable to come out in the open as direct participants to such transactions. Nonetheless, online gambling transactions pertaining to placements of deposits and requests for withdrawals of Indonesian gamblers are coursed through authorized agents of judi bola gaming sites. The agent in turn, will facilitate processing of local fund transfers via mobile banking.