📷 Back in business: Bank Syariah Indonesia (BSI) tellers count United States dollar banknotes at the bank’s branch office on Jl. Thamrin in Central Jakarta on May 11, 2023. The management said the bank had resumed operations after hackers allegedly stole customers’ personal data recently. (Antara/M Risyal Hidayat)
By Leonardo Lapalorcia* (The Jakarta Post) PREMIUM Jakarta Mon, July 21, 2025
As data and technology expand access to goods and services, lawmakers and regulators must ensure it will deliver long-term well-being and not just short-term profits.
Indonesia has made remarkable progress in financial inclusion, expanding financial access from 36 percent to 76 percent of adults in just over a decade. With tools like QRIS, BI-Fast, e-KYC and digital credit reports, Indonesians are transacting, saving, investing and borrowing digitally with ease and at speeds never seen before.
However, financial access has not translated into better financial well-being. Jobs remain scarce, wages stagnant and housing increasingly unaffordable. Debt burdens are growing while credit quality is declining. Access alone is clearly not enough.
As our financial system becomes increasingly digitized and data-driven, Indonesia must now focus on using data in a way that empowers consumers and builds long-term trust. Lenders and fintech firms are already using consumer data to develop products, assess risks, and target customers. As a result, even underbanked and unbanked Indonesians can now complete a loan application in under 10 minutes.
But without clear guardrails, these digital advances risk prioritizing profit over sustainable financial wellbeing. Tools meant to personalize financial services can end up enabling only short-term profit maximization. This is why Indonesia must adopt an ethical business mandate, a principled framework that prioritizes long-term consumer trust, financial resilience and stakeholder accountability.
Ethical business principles help balance the profit motive with protection of consumers. By recognizing consumers as foundational stakeholders of the Indonesian economy, we ensure their wellbeing is not sacrificed for short-term financial gain.
With Indonesia now revising its National Financial Literacy Strategy and Financial Services Roadmap for the 2026–2030 period, the country has a timely opportunity to embed these principles.
To ensure that the increasing quantity of data available in today’s society and economy is used ethically and responsibly, lawmakers and regulators might want to consider the following recommendations:
Introducing an ethical mandate for economic operators.
A key lever for lawmakers and regulators to influence financial wellbeing in a digital economy is data, and for what purposes it should be used for. This is especially important for behavioral data, as it allows service providers to target and profile prospects with great accuracy.
Data governance should not only concentrate on protecting financial behavioral data against unauthorized access or abuse. It should also aim to make this data useful not only for service providers but also primarily for the individuals exhibiting those financial behaviors in the first place.
In Indonesia, the long-awaited Personal Data Protection Law was passed in 2022 and became effective in October 2024. Its full implementation, however, hinges on regulations and policies that the Financial Services Authority (OJK) and Bank Indonesia (BI) as well as stakeholder the Communication and Digital Affairs Ministry have yet to issue.
These sector-specific rules must force financial services providers to disclose how data is collected, stored and used for what purpose in a simple and easily understandable manner to their customers. This includes uses of AI in credit scoring, fraud detection, and product targeting. Most importantly, it must hold accountable service providers to the final purpose that incremental data access is designed for.
By promoting secure, standardized data-sharing frameworks, Indonesia allows lenders and fintech players to make informed business decisions without compromising consumer privacy.
BI, OJK, and the Communication and Digital Affairs Ministry have pushed for the creation of ancillary services that aim to smoothen the credit distribution process and lead to a more efficient financial services sector.
Private credit bureaus (LPIPs), digital certification firms (CAs) have answered this call with innovations that are pivotal to growth in the digital economy. Regulators have also laid the foundation of an Open Banking framework known as SNAP. All this represents strategic opportunities to construct consumer-first principles from the outset, rather than retrofit protections in response to market failures or public scandal.
Initiatives such as the ones mentioned above hold the promise of a more integrated and cohesive financial experience for consumers. This is thanks to a consolidated view of their identity, financial behavior, including bank accounts, investments, insurance policies and credit exposure in a transparent, professional and accountable manner.
Countries worldwide are grappling with similar issues, and their strategies offer valuable insights.
In 2023, Malaysia published an ethics guideline that requires so-called Explainable AI in credit scoring and loan distributions. India and Brazil are quickly advancing in the field of Account Aggregation and Dynamic Consent management. India’s system defines strict usage parameters for the sharing of consumers’ data in Open Banking. Meanwhile, Brazil’s Open Finance approach allows real-time permission management that could inform SNAP development in Indonesia.
However, these approaches stand on the strength of the European Union’s pioneering policymaking approach where, in the aftermath of the 2008 financial crisis, European regulators adopted a consumer-focused approach to financial ecosystems, attempting to balance innovation with responsibility.
The European Union embarked on reforms such as the Consumer Credit Directive to save the consumer from the cycle of over-indebtedness and the burden of unfair loan terms. These policy interventions were not simply reactions to predatory lender actions but also an acknowledgment that financial resilience is a public good.
Perhaps the boldest and apparently contradictory move was with the Second Payment Services Directive (PSD2), which established the groundwork for Open Banking. By mandating that banks make consumer data available, with the consent of consumers, through secure APIs. Yet, unlike previous waves of liberalization, PSD2 was constructed upon a robust ethical framework: consent, interoperability and security. It made sure that consumers owned the data, rather than being themselves the product to be commoditized.
In a data-driven economy, financial well-being cannot be an afterthought. It must be the guiding principle that shapes policy, technology and market behavior. The tools we now have, AI, big data, digital platforms, are powerful, but power without ethics leads to fragility.
Financial systems should be in service of the people, not the other way around. This starts with the recognition that data is not just a resource but a shared responsibility. What approach will Indonesia’s lawmakers and regulators choose?
* The writer is president director of PT CRIF Lembaga Informasi Keuangan, a private credit bureau. The views expressed are personal.
Source: The Jakarta Post
