Yogyakarta, 22nd February 2019 - Digital economy industry has been blossoming in Indonesia. In 2016, there are 120 emerging fintech company and more app-based financial services such as LinkAja, Go-PAY, OVO and such. These financial services ease access for people who are unable to access conventional services, hence fostering financial inclusion. According to World Bank, financial inclusion is one of the way to enhance economic development. Indonesia is working towards becoming leading economy industry in the region, but how prepared are we really? These question inspired Center for Digital Society to hold its monthly discussion Difussion #10 which this time themed Digital Economy (22/02). Three speakers had lively discussion with audiences related to opportunities and challenges Indonesia had in the era of digital economy.
Indonesia Fintech Cybersecurity
The term fintech is still widely unknown. Fintech is actually an abbreviation for financial technology which covers any kind of technology that give access to financial services owned by banks or private companies. Fintech offers regular services such as payment and saving, but it also provides unconventional finance products such as peer-to-peer lending, crowd funding and financial planning. These products are their main attractions, and as more users are attracted to use the service, fintech gets more prone to cybercrime. Bareskrim Polri recorded 30 cybercrime cases related to fintech last year, a lower number compared to other cases. However, fintech breaching inflicts billions of dollars financial loss. OJK Regulation No. 1/2016 regulated fintech ecosystem and consumer protection which require every fintech company to go under regulatory sandbox. Regulatory sandbox is obligatory probation time where new fintech’s data security and risk management are scrutinized before being commercialized.
Initially, every fintech has to acquire certification, namely ISO 27001, to ensure data protection and management system. ISO 27001 confirms company’s data security system, management and make sure each employee understands standard rule of conduct and the importance of data protection. Implementing ISOs is not easy and quite expensive. Also, users in Indonesia are not adequately informed about data protection hence very vulnerable towards data selling. Janitra, the writer of this case study suggested consumers should understand the importance of data protection by knowing company’s background, certification and list of clientele before choosing certain fintech.
Boosting Financial Inclusion to Foster Economic Development
Unbanked people, or people who are excluded from financial service for many reason, is considered a problem that hinders from economic development. These people are unable to access financial products such as insurance, savings and investment due to geographical barriers (unavailability of banks), paper work or lack of solid reasoning to open bank account. In Indonesia, 36% of population have no access to financial service. It makes them financially vulnerable and unable to create long term planning. However, GO-Jek sees unbanked people as potential customers.
Lately GO-Jek developed features within its application which ease commercial transaction and encourage financial inclusion such as GO-Pay. GO-Pay is in-app payment system, enabling users to pay, transfer and save among GO-Jek app user. GO-Jek prides itself on its economic sharing function which ease merchants from paperwork to open bank account. This helps small businesses which lack of means to fulfil collateral requirement. It also bypasses geographical barrier as it operates solely on smartphones, internet penetration is higher by year thus attracts many small business to join the system. In a way, GO-Jek becomes alternative financial service provider, although not necessarily replaces banks.
However, it raises concerns among audiences on what’s going on with small business and services excluded by the existence of GO-Jek. Bolby, the author of this case study, confirmed this. GO-Jek, in some way, dominates development narration and thus injures small business and services which do not involved in current system. They encourage financial inclusion by equipping businesses with easy commercial and financial management through one app. According to World Bank, financial inclusion plays big role to economic development. However, financial inclusion is just one way towards economic development, it doesn’t end there.
Digital Influencer and Consumerism
20,6 billion people is using social media daily, 700 millions of them are using Instagram. This is a big potential market for new celebrities to emerge. Currently, businesses are hugely hiring social media celebrities or known as influencer to advertise products or events. Influencers are not necessarily working in entertainment industry, some of them even are just ordinary people. So, how do we find influencer very influencing? Fayyadh Aidad explained why influencers are very persuasive over viewers: expertise and powers, attractiveness and relatability. Fame easily attracts people into believing what influencers use is what we need. Attractiveness and relatability enhance this power.
Career-wise, digital media open up new opportunities and market for individuals. Becoming digital influencer is relatively easy: we just need creativity, media literacy, tech savviness and ability to engage with audience. However, it also open up more threat such as false advertising. On 2017, Fyre Festival became hits after many celebrities promoted them on social media. Bella Hadid, Kendall Jenner were two of many influencers who invited followers to join these “luxurious” music festival. But Fyre Festival didn’t live up to expectation. It was disastrous and considered a fraud. Billy McFarland, CEO of Fyre Media which organized the event was convicted of fraudulence, but none of celebrities who endorsed it ever got punished. US Consumer Protection Bureau actually has required celebgram or digital influencer to add hashtag to differentiate between personal posts and advertisements. But the enforcement of this regulation was relatively low.
Fayyadh suggested government should understand how internet and digital media works to create regulation in order to protect consumers but also harness digital economy environment. Currently, government has limited to no idea how digitalism affects environment, social and political realm, hence the lack of regulation. Government is also responsible to create awareness within community the importance of digital literacy and responsible consumerism to protect themselves from false advertising.
Written by: Nabiila Nurfitri
CfDS (Center for Digital Society) UGM is a multi-disciplinary research center that is established under the Faculty of Social & Political Sciences University of Gadjah Mada. This research center is built upon the concern over the contemporary dynamics of socio-political condition of the world that is accentuated by the impeccable influence of information technology. The phenomenon triggers the new patterns and complexities in the society, and thus requires new approaches in managing such complexities. Our research and other activities are based on spirits that is aligned with our motto, productive, innovative, & influential.