Digital Banks and Data Security Trends for Fintech in 2021

Senior economists who are members of the Indonesia Fintech Society (IFSoc) predict five business trends in the financial technology (fintech) sector in 2021. Two of them are digital banking and the tightening of user data security.

First, the tightening of user data security due to the Personal Data Protection Law (UU PDP). The Ministry of Communication and Informatics (Kominfo) and the DPR are targeting the completion of this regulation early next year.

Yose Rizal Damuri, Head of the Economics Department of the Center for Strategic and International Studies (CSIS) and Member of the IFSoc Steering Committee, said that fintech needs to prepare strategic steps related to data.

“It is necessary to anticipate various risks of cyber attacks, money laundering, risks of misuse of personal data, and others,” he said during a virtual discussion on Fintech Outlook 2021, Tuesday (29/12).

Fintech is the Target of Cyber Attacks

Based on research from the Indonesian Fintech Association (Aftech), 22% of fintech payment platforms and 18% of financing (lending) have experienced cyber-attacks. As many as 95% of the 154 fintech admitted that less than 100 users experienced cyber attacks in the last year.

In addition, research from Palo Alto Networks states that 66% of 400 respondents think that the e-commerce platform has the potential to be compromised. Then 62% said that the digital payment system had the opportunity to be hacked.

Respondents surveyed held management positions related to information technology (IT) in Thailand, Indonesia, the Philippines, and Singapore. The survey was conducted during 6-15 February.

The second trend is the existence of new regulations. The Financial Services Authority (OJK) is currently preparing new regulations related to financial technology (fintech lending). The regulation will regulate core capital, licensing, and minimum composition for productive loans.

This will improve OJK Regulation (POJK) Number 77 of 2016. OJK also prepares new regulations related to four types of fintech namely aggregators, financial planners, credit risk assessors (credit scoring), and project financing (project financing). This is because their use is increasing.

Digital Bank is also a Trend in 2021

The third trend is the rise of digital banks. “By 2021, it is very likely that digital banks will develop rapidly,” said Yose. BCA, for example, plans to convert the acquired Royal Bank into the BCA Digital Bank. BRI also opens opportunities to convert its subsidiaries into digital banks.

However, Yose assessed that startup companies will also explore the digital banking area. Most recently, Gojek, through its line of business, GoPay, increased its share in Bank Jago to 22%. Before GoPay, fintech lending or Akulaku financing penetrated digital banks by acquiring Bank Yudha Bhakti in 2019 which is now Neo Commerce.

Yose assessed that regulators should make special provisions regarding digital banks. You can do this by imitating Singapore, which has issued a digital banking license. The fourth trend is the application of electronification of regional government transactions and the Third Generation State Revenue Module (MPN-G3).

An economist and member of the IFSoc Steering Committee Agustinus Prasetyantoko assessed that the pattern of community interaction has changed to a digital direction. “Therefore, local governments need to accommodate these changes can be monitored from one platform, performance can be assessed, which region is fast or slow,” said Prasetyantoko.

Finally, the expansion of the distribution of social assistance through fintech during the corona pandemic. Moreover, the results of the Indonesian Political Indicators survey showed that 60.3% of respondents considered that the distribution of social assistance related to the coronavirus had not been on target.

Prasetyantoko assessed that the distribution of social assistance through fintech is more effective and efficient, considering a large number of smartphone users in Indonesia. Based on the ministry’s internal survey, 90% of beneficiaries have cellphones.