Deputy commissioner of Indonesia’s Financial Services Authority (OJK), Indarto Budiwinato, in his The Asian Banker Summit 2025 keynote, outlined the challenges facing financial services today—rising interest rates, geopolitical instability and the increased frequency of systemic shocks in the post-pandemic era. A resilient financial sector amid global uncertainty Despite these headwinds, Indonesia has maintained strong economic momentum. He noted, “Indonesia remains optimistic and resilient.” Economic growth in 2023 reached 5.05%, supported by domestic consumption and inflation control. This performance has placed Indonesia among the world’s top 20 economies and sixth in emerging markets, reaffirming its macroeconomic stability and regional leadership. He cited projections from the International Monetary Fund (IMF), which estimated Indonesia’s gross domestic product (GDP) to reach $1.6 trillion in 2024, underlining the country’s growing economic significance. The government, he said, has demonstrated “prudent fiscal management and monetary coordination” that aligns with OJK’s efforts to safeguard financial stability. OJK’s strategic role in financial sector transformation The deputy commissioner described how the OJK plays a pivotal role in Indonesia’s long-term financial development. Through its Financial Sector Development and Strengthening Law, known as P2SK, OJK has been given broader authority, including in areas such as consumer protection, digital innovation and carbon trading systems. “The law is a game-changer for us,” Indarto said. He emphasised that the expanded mandate allows OJK to respond more effectively to the complexities of today’s financial landscape, particularly in digital finance and emerging risks such as cyber threats and artificial intelligence (AI). OJK has set out a 10-year Financial Sector Master Plan (2021–2025), with a strong focus on financial deepening, digitalisation and the creation of a sustainable financial ecosystem. Indarto said the master plan is “the roadmap that guides all of our efforts in the transformation of Indonesia’s financial system.” Building strong and inclusive financial infrastructure Indarto underscored the importance of financial inclusion as a pillar of resilience. He pointed out that Indonesia’s financial inclusion rate has reached 88%, significantly narrowing the gap with financial literacy, which stands at 49%. “This is a major achievement, but also a challenge,” he remarked, noting that literacy must catch up to inclusion to ensure sound financial decision-making. He shared that OJK is working with stakeholders to address this imbalance through education, behavioural interventions and digital financial literacy campaigns. A key initiative is the development of digital banking and fintech regulations that encourage innovation while safeguarding consumer interests. Indarto also acknowledged that inclusion must go hand in hand with infrastructure. He highlighted ongoing efforts to modernise payment systems and establish interoperable digital identity frameworks that will benefit both consumers and financial institutions. AI governance and regulatory readiness A central theme of Indarto’s address was the rise of AI in financial services. He spoke candidly about the opportunities and risks that generative AI and machine learning present. “AI can help us fight financial crime, but it can also be weaponised,” he warned. The dual nature of AI, he explained, demands a new level of regulatory agility. Indarto highlighted OJK’s initiative to develop a risk-based, proportional regulatory framework that supports responsible AI use. He outlined three main principles: innovation enablement, ethical safeguards and institutional accountability. He noted that OJK is not acting in isolation but is coordinating with other regulators, both locally and globally. He praised the work of Bank Indonesia, the Ministry of Communication and Informatics, and the National Research and Innovation Agency in shaping Indonesia’s AI governance roadmap. He also mentioned collaboration with the Financial Stability Board (FSB) and the ASEAN Capital Markets Forum (ACMF) in aligning regulatory standards. “We are not just observers; we are active contributors to the global conversation,” he affirmed. Consumer and data protection in the digital age On the issue of consumer protection, Indarto emphasised the importance of trust in financial services. “Trust is the currency of the digital economy,” he said. He noted that the growing use of digital platforms raises questions around data privacy, algorithmic bias and cybersecurity. He shared that OJK is strengthening its supervision of digital financial service providers to ensure fair treatment and transparency. Measures include mandatory disclosures, complaint handling procedures and real-time supervisory technologies (suptech) that enable early detection of irregularities. He also pointed to the recently enacted Personal Data Protection Law as a major step forward. “We now have a solid legal foundation for data governance,” he said, adding that it complements OJK’s efforts to create a safer digital financial environment. Green finance and sustainability priorities Turning to environmental issues, Indarto highlighted OJK’s leadership in green finance and sustainable investment. He referenced the creation of the Indonesian Taxonomy for Sustainable Finance, which categorises economic activities based on environmental impact. He explained that OJK has issued green bond regulations and sustainability reporting guidelines for financial institutions. “Sustainability is no longer optional,” he said. “It is integral to long-term risk management and capital allocation.” Indarto stated that financial institutions must integrate environmental, social and governance (ESG) factors into their strategies, not only for compliance but also for competitiveness. He stressed that Indonesia is committed to achieving its net-zero emissions target by 2060, and the financial sector has a critical role to play. Regional integration and cross-border cooperation Indarto called for stronger cross-border cooperation and knowledge exchange among regulators and financial institutions in the region. “No country can address systemic risks alone,” he said. He encouraged participants to build alliances and share best practices. He cited examples of successful regulatory coordination within ASEAN, particularly in capital market integration, cross-border payment linkages and cybersecurity drills. He urged continued investment in digital public infrastructure and regulatory capacity building. Indarto reaffirmed OJK’s commitment to innovation, inclusion and international cooperation. “Together, we can shape a resilient, sustainable and inclusive financial future,” he declared.
