The innovative use of technology in finance is posing challenges to many traditional business models. At the same time it is challenging regulators. The key issue they face is how to balance the desire to encourage new businesses so as to intensify competition and provide better customer services in the sector, while protecting the system and consumers from excessively risky behaviour and potential disruption. For Indonesia the opportunity is very large given the uneven availability of finance and low levels of financial inclusion.
This paper explores the new Indonesian regulation of platform lending in the light of standard regulatory problems, international experience with regulating the sector, and the particular needs of Indonesian development.
This work was undertaken with generous research support from Otoritas Jasa Keuangan, the Indonesian Financial Services Authority.