Regulatory Challenges in Digital Banking Supervision in Indonesia

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FORMOSA NEWS - Jakarta - Regulatory Challenges in Digital Banking Supervision in Indonesia. This research was conducted by Diana R.W. Napitupulu from the Christian University of Indonesia in a scientific article entitled Regulatory Challenges of Digital Banking Supervision in Indonesia published in the International Journal of Law Analytics (IJLA), Vol. 4 No. 1 (2026) Research conducted by Diana R.W. Napitupulu revealed that although Indonesia already has various regulations through the Financial Services Authority (OJK), Bank Indonesia (BI), and Law Number 4 of 2023 concerning the Development and Strengthening of the Financial Sector (P2SK), the regulatory framework is still rooted in the conventional banking model. As a result, a number of risks typical of digital banks have not been comprehensively handled.

Digital banks are growing fast, regulations have not been unified

Digital transformation encourages banks in Indonesia to operate through online account opening, mobile transactions, digital credit, and data-based service integration. These developments expand financial inclusion and service efficiency. However, according to Diana R.W. Napitupulu, the existing regulations are spread across various separate rules: banking laws, payment system regulations, consumer protection rules, and personal data protection laws. This fragmentation creates the potential for overlap as well as a gap in supervision. "The current legal framework is not yet fully designed for digital bank models that rely on technology, cloud computing, and real-time data processing,".

The main challenges of digital bank supervision

Through a normative juridical approach by analyzing OJK and BI regulations and policies, this study identifies a number of crucial issues.

Fragmentation and legal vacuum

Digital bank rules are still positioned as a variation of conventional banks, not a separate category. The neo-bank model and platform ecosystem that combines payments, credit, and data analytics does not yet have a specific regime.

Consumer protection is not optimal

Application-based services and automated systems increase information asymmetry between banks and customers. Emerging risks include:

• Invalid transaction dispute.
• Personal data leakage.
• Unclear responsibility in the event of a system disruption.
• Weak digital dispute resolution mechanism.

Cybersecurity threats

High transaction volumes make digital banks vulnerable to cyberattacks, phishing, and identity abuse. Cybersecurity regulations are considered to be still reactive and not yet based on systemic prevention.

The Limitation of supervision capacity

periodic report-based supervision model is considered inadequate for real-time transactions. Authorities need Supervisory Technology (SupTech) and data analytics to detect risks early.

Coordination between authorities is not yet solid

The boundaries of authority between OJK and BI often overlap in digital banking practices. The integration of payments, loans, and data in a single platform complicates the division of responsibility.

Comparison with Singapore and global trends

This study also compared Indonesia with Singapore. Under the Monetary Authority of Singapore (MAS), digital banks have a special licensing regime that distinguishes between digital full banks and digital wholesale banks. Singapore's technology and cybersecurity risk management standards are more detailed and strict.

Globally, digital bank supervision leads to:

• Risk-based supervision.
• Obligation to report cyber incidents quickly.
• Utilization of RegTech and SupTech for data-driven surveillance.
• Cross-border cooperation in digital infrastructure surveillance.

Indonesia is considered to need to accelerate the harmonization of regulations to be in line with international practices.

Impact on stability and public trust

Regulatory weaknesses are not only administrative problems. Digital system disruptions, data leaks, or major cyberattacks can disrupt national financial stability. More than that, weak consumer protection has the potential to reduce public trust in digital banks. In fact, trust is the main foundation for digital economy growth and financial inclusion.

Author Profile

Diana R.W. Napitupulu, S.H., M.H. Indonesian Christian University.

Areas of expertise: banking law, financial regulation, digital financial system governance, and financial sector law reform.

Research Source

Napitupulu, Diana R.W. (2026). Regulatory Challenges of Digital Banking Supervision in Indonesia. International Journal of Law Analytics (IJLA), Vol. 4 No. 1, pp. 17–36.
DOI: https://doi.org/10.59890/ijla.v4i1.131
URL : https://slamultitechpublisher.my.id/index.php/ijla