The Indonesian Shariah Fintech Association (AFSI) has been appointed by the regulator to assist with developing Islamic fintech in Indonesia.
AFSI has received the greenlight from the Financial Services Authority or Otoritas Jasa Keuangan (OJK) to operate as a Shariah fintech association focusing on the Islamic fintech industry in Indonesia.
“Due to the rapid growth of Islamic fintech in Indonesia, OJK has appointed us to become the first layer for fintech companies looking to submit their applications to the regulator. That means, companies looking to be licensed fintech players in Indonesia have to go through the association to get proof and recommendation from us prior to submitting their application,” Ronald Yusuf Wijaya, the chairman of AFSI, tells IFN Fintech.
Similarly, in Malaysia, the Malaysia Digital Economy Corporation in August launched a fintech capacity-building program in collaboration with Bank Negara Malaysia to support Malaysia-based fintech companies to develop meaningful innovative products and services by enhancing their understanding of legal, compliance and regulation requirements
The appointment is a huge step forward by the regulator to support the development of the Shariah fintech industry which has seen the number of illegal fintech companies rise to a whopping nine times higher than any other countries. From 2018 to June 2020, OJK has shut down 2,591 illegal fintech businesses in the country aided by its Investment Alert Task Force.
Among several initiatives done by AFSI is one where the association also lends a hand in creating regulations in accordance with each Digital Financial Innovation (IKD) business model, which is regulated under POJK 13 /POJK.02/2018 Digital Financial Innovation in the Financial Services Sector.
“The way I see it, OJK would like AFSI to proactively look for threats, how to treat illegal fintechs and how to screen fintech companies in order to determine if they are eligible or ineligible to be licensed and also to look at their structure, if it’s Shariah compliant, among others,” explains Ronald.
The appointment was a fairly long process in which it took 15–16 months and several live demonstrations by AFSI for OJK to be confident that AFSI is competent in lending a hand in developing Indonesia’s Shariah fintech industry.AFSI was established back in 2017 and to date, the association has 61 members comprising 20 peer-to-peer lending members, 27 members of IKD, two members of Shariah equity crowdfunding, two fintech payment members and 10 non-fintech members.