Indonesia’s open banking future: designing effective regulatory approaches

To determine the most suitable approach for framing open banking regulations, it is crucial to understand the specific goals of open banking adoption in a particular country. By employing a legal comparative approach, this paper explores regulatory frameworks for designing open banking regulation in Indonesia. The analysis encompasses key legislative instruments, such as the Payment Services Directive 2 (PSD2) in the UK, Consumer Data Right (CDR) in Australia, General Data Protection Regulation (GDPR) in the EU, and relevant Indonesian laws. The research finds that the Indonesian Financial Services Authority (OJK) Regulation adopts a ‘bank-centric’ model, granting financial institutions discretionary power over TPP access by establishing bilateral partnerships to facilitate data access. Contrastingly, jurisdictions like the EU, UK, and Australia employ legislative tools that ob-ligate banks to provide TPPs access to customer data upon explicit consent. The ‘bank-centric’ model under OJK Regulation could reduce consumer choice. Additionally, conflicts of interest may arise, with banks favoring their TPPs, undermining fairness. Lack of standardized access might cause market fragmentation. To achieve the objectives outlined in visions two and three of the BSPI 2025, it is crucial to shift from a ‘bank-centric’ model to an inclusive framework that fosters broader participation. This objective can be achieved through the implementation of standardized APIs and a centralized accreditation system for Third-Party Providers (TPPs), as observed in the three countries.