Indonesian regulatory bodies and financial technology (fintech) companies are trying to strike a balance that will encourage innovation in the industry while also maintaining a regulation that ensures customers’ security.

Financial Services Authority (OJK) head Triyono said on Friday that the authority was pursuing a “light touch and safe harbor approach” to encourage what he called responsible innovation, which would prioritize security, customer protection and well-managed risks.

“It is very, very important,” Triyono said in a Jakpost Fintech Fest webinar series hosted by The Jakarta Post on Friday. “It means no regulation violation, for example, and also certainly brings good benefits to society, handling customers very well and data protection.”

Triyono said the unfolding COVID-19 pandemic was a game-changer for the fintech industry as it accelerated the speed of innovation. However, the industry is still heavily regulated with 135 prevailing regulations related to payment — although some fintech companies also provide other services such as wealth management.

Erwin Haryono, executive director of the payment system department at Bank Indonesia (BI), said the central bank was planning to come up with one umbrella regulation for payments that would streamline all the regulations to encourage more innovation in the industry.

The planned umbrella regulation is expected to cover, among other issues, licensing, data policy, supervision and cybersecurity framework.

“Hopefully, by the end of the year we will have one single payment regulation that will be principle-based, and from that, we will have branches — but not as many as we have today,” said Erwin. “It will be very supportive of innovation.”

Bank Indonesia is also preparing other initiatives based on its 2025 payment system road map, including creating a data hub and real-time payment system called BI-Fast to boost the fintech industry in particular and the economy in general.

Indonesia’s economy was forecast to grow by 5.75 percent per year between 2020 and 2024 if it adopted technological advances, marking an additional 0.55 percentage point growth rate, said Erwin, quoting data from the Asian Development Bank (ADB).

In the second quarter, the economy contracted by 5.32 percent year-on-year (yoy). The government is expecting an annual contraction of between 0.6 and 1.7 percent this year.

For e-wallet Gopay, the pandemic has accelerated the use of its recent investment feature called GoInvestasi, which allows customers to buy and sell gold, according to managing director Budi Gandasoebrata. GoInvestasi is a collaboration with investment platform Pluang.

“So, what we are seeing today is a lot of shifts in customer behavior, starting from having to move to online transactions. Also, people are more restrained when it comes to spending and they see more on investment,” said Budi.

“Essentially, all the different use cases we try to cover. And I think underneath what we are really trying to do is solve the daily hustle of users when it comes to payments.”

User experience is key to Gopay’s innovations, including its latest investment capability. But more importantly, “we want to make sure that we partner with a platform that is supervised and licensed by OJK as well”.

Investment in gold, traditionally seen as a safe investment in uncertain times, is soaring as people turn to bullions to protect their wealth. Meanwhile, Indonesia’s financial market is seeing a rise in retail investors as more information is available online to better plan individuals’ finances.

Education fintech company Pintek is also taking part in growing the country’s economy with its innovation in the education sector, namely providing a peer-to-peer (P2P) lending platform for students and educational institutions.

Pintek, which was registered with the OJK in 2018, has disbursed more than Rp 100 million (US$6,722.84) in loans to more than 3,000 borrowers in 28 provinces, according to Tommy Yuwono, the founder and president director. More than half are first-time borrowers and women.

“My dream is simple: I don’t want people to be afraid to take loans when it is productive,” said Tomy.

“Productive loans, especially for yourself, will level up your living standards and earnings in the future. I hope the education sector, parents and students will […] invest for themselves in education.”

Tommy also said the company’s ratio of bad loans was around 0.1 percent, well below the overall non-performing loans (NPL) ratio in the fintech industry, which increased to 7.99 percent in July as a result of the decline in income among borrowers.