Indonesia shuts down 826 illegal fintechs in 2019
OJK shuts down 826 illegal start-ups.
Indonesian regulators have closed down 826 illegal start-ups this year alone as it attempts to crackdown on unlicensed fintechs, Jane Connolly writes.
Bloomberg reports that Tongam L Tobing, chief of the investment watchdog at the Financial Services Authority (OJK), says these firms are difficult to detect because they operate across websites, mobile apps and social media.
OJK has turned to the police and public to help track these companies, who often offer easy loans.
With the majority of residents not having access to formal banking services or credit cards, and large gaps between supply and demand for financial services, Indonesia is considered an attractive market for fintech start-ups.
A report by Google and Temasek Holdings Pte suggested that Indonesia has the fastest growing online economy in the region and will reach $100 billion by 2025.
A spokesperson for the National Police tells Bloomberg that these illegal fintechs charge exorbitant interest rates and use unethical recovery practices, threats and persecution to intimidate customers.
“What makes the fintech firms thrive is because society is still easily tempted by offers of loans with less hassle,” says Tongam L Tobing.
The regulator has reportedly closed down 1,230 fintechs since its crackdown began last year. Tobing confirmed that while the origin of nearly half of these was not known, 22% had their servers in Indonesia and 15% in the US.
