Moreover, the COVID-19 crisis seems to have given a structural boost to the development of the digital economy as many people and entrepreneurs who were previously hesitant, or unwilling, to – for example – purchase or sell items online were essentially forced (or at least encouraged) to shift to the digital domain amid tight social and business restrictions.

In various reports and articles we have emphasized that Indonesia in particular holds great potential in terms of the digital economy (especially e-commerce) for the following reasons:

  • Indonesia is home to a huge, young, and tech-savvy population;
  • Urbanization – like around the world – has gone very fast in recent decades;
  • There is an expanding middle class on the back of rising per capita GDP;
  • Rapidly rising Internet & smartphone penetration (incl. Internet infrastructure);
  • The blossoming of tech startups that offer efficient solutions to consumers/ entrepreneurs.

The tables above show that e-commerce is expected to grow enormously in the years ahead, a development entrepreneurs and investors have to capitalize on. Meanwhile, what is not mentioned in the tables above but can act as the glue (or cement) that holds all things together is digital banking. Already, electronic wallets (or e-wallets) are very popular in Indonesia (and are engaged in a fierce battle for market share). However, the digital banking industry is a sector that has not been properly defined or regulated in Indonesia so far, even though a number of banks have already been labelling themselves ‘digital banks’ over the past year or so (which is essentially a gimmick to attract attention; Bank Jago being a good example).

But the situation is about to change. Indonesia’s financial services regulator – named the Financial Services Authority or in Indonesian Otoritas Jasa Keuangan (OJK) – has issued new regulations in August 2021 that define and regulate the establishment of full (branchless and cashless) digital banks across Indonesia. We had covered this topic in the March 2021 edition of our monthly report when the OJK announced that it was busy revising OJK Regulation No. 19/POJK.03/2014 on Branchless Financial Services in the Context of Inclusive Finance. Now new regulations have actually been issued, it is worth taking a closer look at the content and implications of these new regulations.


The full article is available in our August 2021 report. This report can be purchased by sending an email to or a message to +62.882.9875.1125 (including WhatsApp).

Take a glance inside the report here!