Embracing digital finance innovation in the financial sector omnibus – Wed, January 11 2023

A survey by Google, Temasek and Bain & Co (2020) predicted that digital financial services in Southeast Asia would increase consistently and reach a value of US$1.2 trillion in 2025. Digitalization is indeed increasing the variety of products to meet the needs of businesses and consumers. Inclusion and the prospect for Indonesia’s small and medium enterprises (SMEs) to become the country’s growth engine are mounting. The delivery of financial services is becoming more efficient, and lower net margins and better prices for financial sector users can be expected. 

However, digital innovation is like two sides of a coin, where it offers great benefits but can cause potential disruption. If not approached carefully, digital financial technology can undermine trust in the financial sector and trigger financial sector instability that could set back Indonesia’s vision for robust, sustainable and inclusive growth.