Cyber Risks in Fintech From Regulator Point of View

FinTech ASEAN Sumber: Medium.com (2016)

FinTech in Indonesia FinTech Profile in Indonesia (Sector Based) FinTech Profile in Indonesia (Based on starting year) FinTech Profile in Indonesia (based on amount of company) Sumber: OJK & Asosiasi FinTech indonesia FinTech Peer to Peer Lending dominate Fintech Industry in Indonesia (57 Perusahaan), next is Fintech Payment (48 perusahaan). Most of FinTech companies (78%) started on 2015. FinTech Companies in Indonesia increase more that 3 times from 40 perusahaan on end of 2014 become 165 companies on first of 2016

FinTech Actors Telecommunication Companies Financial Industries Bank Capital Market Non-Bank Financial Institutions Insurance Multi Finance Micro Finance Institutions Pawn Shop Venture Capital Cooperative Start-up Companies

Perdagangan Berjangka Buy/Sell Futures Commodity By Regulation E-Goverment Ekonomi Digital E-Commerce FinTech 2.0 Digital LJK Digital Banking FinTech 3.0 – 3.5 Start-Up Companies c c c Perbankan Pasar Modal IKNB Pembayaran Koperasi Bursa Berjangka B2P Lending E-Voucher Bitcoin E-Banking E-Stocks Bonds Mutual Funds Trading E-Asuransi E-Penjaminan E-Dapen E-LKM E-Pembiayaan E-Gadai APMK E-Money NPG UU Perkoperasian UU Perdagangan Berjangka KUHPerdata Laku Pandai Meminjamkan Equity Based Crowdfunding Menukarkan Digital Branch E-Pasar Buy/Sell Futures Commodity Loan Based Crowdfunding Banking Anywhere (Omnichannel) Per-UU Perbankan Per-UU Pasar Modal Per-UU IKNB Per-UU Bank Indonesia Ket: APMK : Alat Pembayaran dengan Menggunakan Kartu NPG : National Payment Gateway Menyimpan Menginvestasikan Membiayai Meminjamkan Membayar

Key Security point According to PwC’s Global FinTech Survey 2016,almost 56% of the respondents identified information security and privacy as threats to the rise of fintech

Cyber World Facts Cyber Space Cyber Threat Cyber Attack Cyber Security Cyber Crime Cyber Law Fintech will make the cyber space getting wider and deeper which also increase the risk cyber threat that lead into more tremendous and complex cyber attack Pemanfaatan solusi digital menyebabkan kita memasuki area siber (Cyber Space) Masuk ke area siber menyebabkan munculnya risiko terhadap ancaman siber (Cyber Threat) Ancaman siber yang dimanfaatkan oleh pihak yang tidak bertanggung jawab akan menimbulkan serangan siber (Cyber Attack) Agar kita dapat mendeteksi, menahan dan menanggulangi serangan siber, maka dibutuhkan keamanan siber (Cyber Security) serangan yang siber yang terdeteksi dan menimbulkan kerugian bagi korbannya disebut kejahatan siber (Cyber Crime) Serangan yang siber yang terdeteksi dan menimbulkan kerugian bagi korbannya disebut kejahatan siber (Cyber Crime) Kejahatan siber inilah yang dapat dibawa ke ranah hukum untuk ditindak dengan hukum perihal kejahatan siber (Cyber Law) *Based on Prof. Richardus Eko Indrajit

Importance of Information Technology Security Improve customer protection Increase trust in the financial services industry Raise customers awareness of information security Lowering the possibility of security threats in the industry Lowering the possibility of fraud Lowers the risk of accumulative investment in the industry OJK can contribute to the economy of Indonesia directly or indirectly with the application of the due diligence, due skill and due care in the financial services industry

Fintech in Indonesia’s insurance market Marketing channel Through owned company ebsite Through provider Claim handling Currently still use company website , example Autocillin Mobile Claim owned by PT Asuransi Adira Dinamika

Some example of providers in insurance marketing channel Rajapolis.com pasarpolis.com cekpremi.com mironline.co.id PT Asuransi Central Asia PT Avrist General Insurance PT Asuransi Reliance Indonesia PT Asuransi Sinar Mas PT Ace Jaya Proteksi PT Asuransi Bina Dana Arta Tbk. PT Asuransi Central Asia PT Ace Jaya Proteksi PT Asuransi Adira Dinamika PT AIG Insurance Indonesia PT AXA Life Indonesia PT Asuransi Cigna PT Central Asia Financial PT. KB Insurance Indonesia PT KSK Insurance Indonesia PT Lippo General Insurance Tbk PT. Malacca Trust Wuwungan Insurance PT. Asuransi Umum Mega PT. MNC Asuransi Indonesia PT. Asuransi QBE Pool Indonesia PT Asuransi Rama Satria Wibawa PT. Asuransi Sinar Mas PT Zurich Insurance Indonesia PT Asuransi Bina Dana Arta Tbk. PT Asuransi Central Asia PT Asuransi Adira Dinamika PT AIG Insurance Indonesia PT Bess Central Insurance PT. MNC Asuransi Indonesia PT Asuransi Simas Net PT Asuransi Mitra Pelindung Mustika PT Zurich Insurance Indonesia PT Asuransi Raya PT Avrist General Insurance PT. Malacca Trust Wuwungan Insurance PT Asuransi Wahana Tata PT Lippo General Insurance Tbk PT Asuransi Bina Dana Arta Tbk. PT Asuransi Central Asia PT Asuransi Adira Dinamika PT AIG Insurance Indonesia PT Bess Central Insurance PT. MNC Asuransi Indonesia PT Asuransi Simas Net PT Asuransi Mitra Pelindung Mustika PT Zurich Insurance Indonesia PT Asuransi Raya PT Avrist General Insurance PT. Malacca Trust Wuwungan Insurance PT Asuransi Wahana Tata PT Lippo General Insurance Tbk Secara umum portal tersebut memiliki produk-produk yang dijual oleh perusahaan asuransi. Polis bisa dicetak langsung atau juga dikirim oleh perusahaan asuransi jika sudah terjadi transaksi Pembayaran premi langsung dibayarkan ke asuransi

Risk Based Supervision Cycle Undersatnding NBFI (understand the profile of the company, its operations and financial performance) 2. Measurement and Updating Risk Level (measuring and update the level of risk based supervision) Q u a l i t y A s s u r a n c e 3. Determination of Monitoring Status (Determining the status of supervision based on risk level) 4. Surveillance Activities (Doing supervision activities e.g: on-site & off-site supervision, executive meeting)

Insurance Supervision Risk Module MODUL RISIKO IKNB KEPENGURUSAN (BOARD/Management ) TATA KELOLA (GOVERNANCE) STRATEGI (STRATEGY) OPERASIONAL (OPERATIONAL) KEKAYAAN DAN LIABILITAS (ASET AND LIABILITY) DUKUNGAN DANA/PENDANAAN (CAPITAL SUPPORT/FUNDING) RISIKO ASURANSI (INSURANCE RISK)

POINT OF CONCERN Developing risk based supervision approach to fintech innovation, some principle: Regulation must take into account the innovation regulation and supervision must be proportionate to the risk posed where innovation is pervasive and technology is used widely to Increase efficiency, better risk management, Create new opportunities and Improve people’s lives Balancing the innovation environment with the mandate of supervisors in consumer protection Better know your customers system and anti money laundering, establishing and operating sound internal control mechanisms, effective procedures for risk assessment (including risk identification) or ensuring on a third party (outsourcing) does not impair the quality and the continuous performance of services. Strenghtening insurance capital solvency due to increasing risk and dynamic environment Better coordination with other authorities , association and industry to create safe environment (e.g data protection, cyber security, better infrastructure ) to robust fintech development