Digitization, FinTech Disruption, and Financial Stability: The Case of the Indonesian Banking Sector

Jameaba, Muyanja-Ssenyonga

doi:10.2139/ssrn.3529924

Cited by 20 publications

(15 citation statements)

References 32 publications

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“…Fintech firms must navigate complex and evolving regulatory landscapes, including consumer protection laws, anti-money laundering (AML) regulations, know your customer (KYC) requirements, and data protection regulations, to ensure compliance and mitigate legal and regulatory risks (Alahira et al, 2024). Fintech startups may face operational challenges, including technology failures, system outages, processing errors, and service disruptions, which can impact the reliability, availability, and quality of fintech products and services, undermining consumer trust and confidence (Jameaba, 2020). Complex algorithms, opaque decision-making processes, and limited disclosure requirements may reduce transparency and accountability, making it difficult for consumers to understand how fintech products and services work, assess associated risks, and make informed financial decisions.…”

Section: Overview Of Fintech Innovationsmentioning

confidence: 99%

Financial Law: Policy Frameworks for Regulating Fintech Innovations: Ensuring Consumer Protection While Fostering Innovation

Etinosa Igbinenikaro,

Adefolake Olachi Adewusi

2024

Financ. account. res. j.

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The proliferation of fintech innovations has necessitated the development of comprehensive regulatory frameworks to uphold consumer protection standards while fostering an environment conducive to technological advancement. This paper delves into the intricate policy landscapes governing fintech innovations, with a primary focus on striking a delicate equilibrium between safeguarding consumer interests and nurturing innovation. By conducting an in-depth analysis of global regulatory approaches, including variations across jurisdictions and the pivotal roles of governmental bodies, this study explores pivotal measures aimed at fortifying consumer protection. These measures encompass a spectrum of strategies, ranging from stringent disclosure requirements and robust privacy safeguards to the implementation of anti-money laundering (AML) and know your customer (KYC) protocols. Furthermore, the study examines mechanisms for resolving consumer complaints and ensuring accountability within the fintech sector. Moreover, the paper investigates various avenues for fostering innovation within the regulatory framework, such as the establishment of regulatory sandboxes and the promotion of collaborative endeavors between regulatory authorities and industry stakeholders. Through the examination of pertinent case studies, this study highlights both successful regulatory interventions and challenges encountered in regulating fintech innovations. These insights culminate in a series of actionable recommendations tailored for policymakers, aimed at navigating the evolving landscape of fintech regulation. Additionally, the paper offers projections on future trends in fintech regulation, thereby equipping policymakers with the necessary foresight to adapt to the dynamic nature of the fintech ecosystem. Keywords: Financial Law, Policy, Frameworks, Fintech Innovations, Consumer Protection, Fostering Innovation.

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Section: Overview Of Fintech Innovationsmentioning

confidence: 99%

Financial Law: Policy Frameworks for Regulating Fintech Innovations: Ensuring Consumer Protection While Fostering Innovation

Etinosa Igbinenikaro,

Adefolake Olachi Adewusi

2024

Financ. account. res. j.

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“…The bank loan approval process, a critical link in the financial services chain, faces unprecedented challenges and expectations in today's digital age [18]. Implementing a neural network promises transformative solutions but comes with a series of challenges [19].…”

Section: Problem Statementmentioning

confidence: 99%

Design and Creation of a Neural Network for the Classification of Bank Loan Applicants into Suitable and Non-Suitable Candidates

Márquez,

Quezada,

Robles-Gallegos

et al. 2023

IJSBT

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In the contemporary digital era, financial institutions are actively seeking ways to enhance and streamline their decision-making processes, particularly in critical areas like the approval of bank loans. Traditionally, this procedure has heavily relied on the manual examination of applicant information against predetermined criteria. However, the advent of artificial intelligence and machine learning has ushered in a new era, where neural networks are emerging as a promising tool for intelligent decision-making, aiming to significantly enhance the precision and efficiency of these crucial determinations. The system is developed using supervised artificial neural networks. This system is trained with 8 input variables to make predictions about the feasibility of granting a loan to a user. The goal is to determine whether the application is favorable, or, on the contrary, if it presents risks or disadvantages that could make granting a loan unfavorable. It is worth noting that the system has shown good performance in terms of favorable predictions.

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“…Besides financial inclusion, several other benefits have also emerged because of fintech innovation. As noted by Jameaba (2020), the development of fintech in Indonesia has enabled the existing financial institutions to develop a new business model that benefits from "data collection, storage, sharing, and discerning actionable insights." This new business model is called "open banking."…”

Section: Implications For the Financial Systemmentioning

confidence: 99%

Fintech, Banks, and the Covid-19 Pandemic: Evidence From Indonesia

Sapulette

Effendi

Santoso

2022

BEMP

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This study investigates the relationship between fintech and banks and how this relationship is affected by the COVID-19 pandemic. We use monthly stock data of all banks consistently listed on the Indonesian Stock Exchange from February 2018 to March 2021. For fintech data, we use a total of four proxies that encompass both lending and borrowing aspects of peer-to-peer lending fintech. To provide robust results, we use five model specifications. Furthermore, we also estimate the models using both the fixed effect and the two-step system generalized method of moments estimators. To see the dynamics of the relationship between fintech and banks before and during the pandemic, we estimate one of our five models using half-yearly data for each semester from the second semester of 2018 to the second semester of 2020. Our fixed effect and two-step system generalized method of moments estimates indicate a relatively less negative impact of fintech on bigger banks. This relationship is further exemplified during the COVID-19 pandemic period. We argue that these findings have significant implications for the Indonesian financial authorities’ open banking strategy and for the future of the Indonesian financial system in general.

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Digitization, FinTech Disruption, and Financial Stability: The Case of the Indonesian Banking Sector

Cited by 20 publications

References 32 publications

Financial Law: Policy Frameworks for Regulating Fintech Innovations: Ensuring Consumer Protection While Fostering Innovation

Financial Law: Policy Frameworks for Regulating Fintech Innovations: Ensuring Consumer Protection While Fostering Innovation

Design and Creation of a Neural Network for the Classification of Bank Loan Applicants into Suitable and Non-Suitable Candidates

Fintech, Banks, and the Covid-19 Pandemic: Evidence From Indonesia

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