Fintech companies must register to Bank of Indonesia to get a license. Here are the steps to do it.
The Bank of Indonesia (BI) is Indonesia’s main financial institution in Indonesia, and it has recently expanded its operation to cover fintech. The opening of Bank Indonesia Fintech Office was aimed to regulate fintech industry and development, protecting both customers and fintech practitioners from shady practices of thefts. One of the consequences is that fintech companies must have a license from BI to run businesses.
Steps in Registering Fintech Company to BI
There are seven steps a fintech company must go to get a business license from BI, which are:
1. Registered in BI database
Registering to BI is a mandatory step all business owners must do when opening companies in Indonesia. If the company names are not listed in the BI database, they cannot get licenses.
2. Review by BI
The first registration step includes handing the details of the company’s business model. BI will review this business model before deciding whether the company can go through the next step or not.
3. Presentation about the business model
If BI thinks that the company has potentials, a company representative may need to do a presentation about the business model.
4. Regulatory sandbox test
After passing the presentation step, BI will give regulatory sandbox model for the company to be applied. This is a simulation model created to see how the company's business model will apply in the real world. BI creates a unique regulatory sandbox for each company.
5. Review
After applying the regulatory sandbox model, the company must send the report to the BI for reviewing process. Depending on the company's potentials, BI may require them to do revisions. The final result determines whether a company deserve a license or not.
If a fintech company passes the reviewing stage, it will get a license from BI. If not, the company's operation will be stopped. Alternatively, BI may give different status to the company, depending on the test results and reviews.
Criteria of Licensed Fintech Company in Indonesia
Onny Widjanarko, the Executive Director of Payment Method Policy Department at BI, said that the institution had prepared a Regulatory Sandbox, which is a series of test to see if a fintech company fulfills all criteria. The tests will cover all aspects of the company service, such as payment method, business model, service, and products.
With the test, BI want to make sure that the company fulfills several criteria, such as:
· Practicality in payment method
· Innovations in products and services
· Availability of the service for a wide range of customers
· The ability of the payment method to be used everywhere
· Benefits in various aspects
· Identification process in risk mitigations
· Application of risk mitigations
Business owners must prove that their companies have these criteria before the set deadlines arrive. If the company gets a license, it means that all these criteria are fulfilled. Depending on the size of the company, it may need to get additional permits from other institutions, such as Otoritas Jasa Keuangan (Financial Services Authority, or OJK).
As a fast-growing and high-tech business sector, financial technology requires a strict licensing process by the authorities before operating. Getting a business license from BI is an important step to make sure that the company is reliable.
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