Branchless Banking to Face Greater Security Scrutiny
Bank Indonesia, the central bank, says it will focus on ensuring security as part of regulations on branchless banking.
Branchless banking, which allows banks to deliver services through avenues such as mobile phones, is aimed at boosting banking participation among Indonesians.
Bank Indonesia’s governor, Darmin Nasution, said on Sunday that branchless banking, or e-banking, involved various parties aside from banks, such as telecommunications operators, and would cater to non-bank customers as well. Still, that would require regulations that could ensure every transaction was secure.
“We are preparing a number of regulations to oversee [branchless banking] transactions and its security system,” Darmin said on Sunday.
He said the security system was the most crucial factor as more and more people used mobile-banking services to do things like settle payments for goods and services.
“We need to know more about how mobile banking transactions work, and we also need more data. We’re not technology experts, so if there’s a transactions that goes wrong, who will be responsible?” Darmin said.
Bank Indonesia will also monitor agent banking — a service in which banking services for the general public are carried out through a third party.
“We need to study this and then create a standard,” Darmin said.
A World Bank study this year showed that only 20 percent of Indonesian adults — defined as age 15 or older — had savings accounts in any formal financial institutions, while only 9 percent went to banks or other financial firms to obtain loans. According to a 2010 census, Indonesia had around 170 million people aged 15 or older, or about 70 percent of the country.
Neighboring countries such as Malaysia and Thailand have fared better than Indonesia in accumulating wealth, with their banking sectors accounting for more than 100 percent of gross domestic product.