Coordinating Minister Airlangga: Government Supports The Development Of Digital Financial Innovation

JAKARTA - The COVID-19 pandemic has changed people's behavior in various sectors. After the pandemic, people's behavior tends to have a high level of technology utilization.

This situation is a great opportunity that must be utilized to accelerate digital transformation in the financial sector so that it can contribute positively to accelerating economic recovery. Coordinating Minister for Economic Affairs Airlangga Hartarto said the government was pushing for the acceleration of digital transformation in all aspects of supporting economic activity, especially digital economic activity in Indonesia which continues to increase.

"In fact, 41.9 percent of the total digital economy transactions in the Southeast Asia Region during 2020 came from Indonesia. Currently, Indonesia's total digital economy transactions have reached USD 44 billion and the majority contributed by e-commerce," said Airlangga, in a written statement, Tuesday, October 12.

E-commerce transactions, digital banking, and electronic money are also predicted to continue to increase this year with the largest increase in e-commerce transactions, which is 48.4 percent (YoY). Meanwhile, electronic money and digital banking are projected to increase by 35.7 percent (YoY) and 30.1 percent (YoY), respectively.

Fintech lending has also experienced rapid development, where outstanding loans in August 2021 recorded a significant increase to IDR 26.09 trillion with total new loans throughout 2021 reaching IDR 101.47 trillion.

Behind the great innovation opportunities, Indonesia also still has a number of challenges that must be overcome in order to create a good digital economy ecosystem. The 2020 Indonesia Global Innovation Index shows Indonesia's position is ranked 85th out of 131 countries. Meanwhile, the 2020 Indonesian Digital Literacy Index is on a medium scale.

"This situation requires new breakthroughs from all parties. Digital infrastructure development, human resource development, and regulation are the main keys in realizing a digital economic ecosystem that supports economic recovery in various sectors, including the financial sector," said Coordinating Minister Airlangga.

The government also encourages the presence of digital banks in the country. Currently, regulations related to Commercial Banks are regulated in Financial Services Authority Regulation (POJK) Number 12 of 2021 concerning Commercial Banks which group banks based on core capital. Banks are grouped into four Bank Groups based on Core Capital (KBMI), namely:

(1) KBMI 1: Core capital up to IDR 6 trillion

(2) KBMI 2: Core capital between IDR 6 trillion - IDR 14 trillion

(3) KBMI 3: Core capital between IDR 14 trillion - IDR 70 trillion

(4) KBMI 4: Core capital more than IDR 70 trillion

The existence of this general rule has forced many Book 1 Banks to merge to meet the capital requirements which rose significantly in line with the development and transformation of the digital economy, currently, a number of Financial Technology (fintech) companies are buying Bank Buku 1 banks and turning them into Digital Banks.

"Currently, digital banks are becoming more and more, the result of the transformation of small banks that were bought by Fintech and converted into digital-based banks," said Coordinating Minister Airlangga.