Aidil Zulkifli, Digital Alpha Indonesia CEO, the company behind fintech UangTeman after an interview with Jakarta Globe on Wednesday (14/12). He said he wants to triple Uangteman's loan disbursement next year. (JG Photo / Tabita Diela)

UangTeman to Adopt Peer-to-Peer Service as OJK Bars Balance-Sheet Lending


JANUARY 11, 2017

Jakarta. UangTeman, Indonesia's first online lending service, is set to change its business model to peer-to-peer lending to comply with the Financial Services Authority's latest, a top executive said on Tuesday (10/01).

"We hope that [the change] will be completed at the end of the first quarter this year," Aidil Zulkifli, chief executive at Digital Alpha Indonesia, the company that develops UangTeman, told the Jakarta Globe.

"UangTeman will gain a license as a financial technology company in Indonesia under the supervision from OJK," he said.

UangTeman is among the local fintechs who use a balance sheet lending model, meaning it distributes funds from its own pocket instead of passing funds from individual or business lenders in a peer-to-peer business model.

UangTeman said the change will be "seamless" for debtors and it will welcome lenders on its website just like other peer-to-peer (P2P) lenders.

Zulkifli's comments came as a response to OJK's latest regulation on financial technology released Dec. 29. The regulation forbids any financial technology companies to loan out its own money, to prevent them prying on best debtors from traditional financial firms and banks. It was reminiscent of the government's previous regulation which tried to protect existing taxi companies from Uber and the like.

"OJK wants fintech companies' business model to be off balance sheet because there are a moral hazard risk and a tendency of front running practice," Hendrikus Passagi, an OJK senior research executive, told reporters.

Balance sheet fintech lenders are similar to financing companies or banks which are bound to much stricter regulation, Hendrikus said. Hence, it needs to change its business model into P2P or join with other P2P lenders as investors.

Also, OJK would not force the firms to have a license or to convert into P2P lenders, but any problems between financial technology firms and its customers will be settled in court using the civil code and OJK will not provide protection for either party.

"If anything bad happens outside the matter that we have formally regulated then OJK will not be held responsible," Imansyah, OJK deputy commissioner strategic management, said.