Indonesia’s Financial Services Authority, known as the OJK, has forced 826 FinTech startups to close up shop
The reason is that the financial regulator is trying to control the rising tsunami of new ventures operating in the sector without a license. With these new announced closures, the total number of closed down FinTech enterprises has reached 1,230 since the authority begun its crackdown in 2018.
Authorities in the country want to put an end to these new businesses operating without a license as many of them have charged inflated fees for their services, according to the country’s police spokesman, Bloomberg reports.
Additionally, many of the startups allegedly resorted to unethical or even criminal means to squeeze money out of people. The police revealed people have been threatened and persecuted by some of the startups.
But the authorities have their jobs cut out for them to stave off the uprising of unethical FinTech organizations. Many of the closed firms had operated across a number of digital platforms like social media channels, mobile apps and websites. Doing so made them hard for the authorities to detect.
Moreover, it is not always clear where these companies originate. That was the case in 42 per cent of the 1,230 cases that the regulator has dealt with. Only 22 per cent of the shut down FinTech startups were in Indonesia.
Part of the reason why these firms are popping up in Indonesia is because the region the region as a whole is a prime location for FinTech innovation. A November 2018 report by Google and Temasek Holdings researched Southeast Asia’s internet economy. The researchers concluded that the market would be worth $240bn by 2025. Of the countries in the region, Indonesia’s internet economy is growing faster than anyone else. It is expected to be worth $100bn by 2025.
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