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What Agreements are Required for Running a Fintech Startup in Indonesia?

Fintech comes from the term ‘financial technology’. It refers to the innovation based on technologies aimed at surpassing traditional financial methods and challenging traditional financial institutions. It is an umbrella term that encompasses a great number of financial services that are transforming in this modern digital era.

Some of the major services under fintech include mobile payments and e-wallets, digital banks, P2P lending and crowdfunding, cryptocurrency and blockchain, insurance, and many others.

Though fintech is still relatively new in Indonesia, the country has all the resources to make fintech prosper including the establishment of the Financial Technology Association.

It is no secret that Indonesia has a budding market and the potential to become one of the world’s major fintech markets. With its unique fintech lending ecosystem, high level of mobile penetration, diverse demographics, huge population, supportive country’s regulation, cross-industry collaboration, and nature of its market, Indonesia is well-positioned to become a key fintech hub.

According to PwC, fintech P2P lending is expected to reach accumulative loan disbursements of IDR 223 trillion by 2020. This will allow more individuals (about 12.4% more) in the country to have credit access by the same year.

To run a fintech company in Indonesia, there are several agreements you need to pay attention to. We have outlined some key agreements in this guide. But first, let’s see how to incorporate a fintech startup in Indonesia.

How to Incorporate a Fintech Company in Indonesia

Indonesian Financial Services Authority (OJK) issued a regulation known as the Digital Financial Innovation Regulation in 2018 on how to form a fintech company in the country.

Here is the process you must go through if you want to incorporate a fintech startup in Indonesia:

1. You first must apply and register your startup at OJK.

2. OJK will then get your company to go through a regulatory sandbox. A regulatory sandbox allows OJK to conduct experiments on your fintech startup and then determine your business functions.

3. Institutions can choose one of the following fields and submit the regulatory sandbox request:

  • Capital markets
  • Banking
  • Non-banking
  • Financial industry

 
4. A regulatory sandbox process often takes approximately 12 months. An extension of 6 months is possible when necessary.

5. After that, you have to proceed with the fintech permit application at OJK.

Agreements Required for Fintech Startups in Indonesia

Fintech businesses especially financial services and P2P lending services have plenty of agreements to deal with in terms of their establishments and business operations. Some are compulsory and some are not.

1. P2P Lending Agreements

  • Agreement between P2P service operator and lender: it is required for operations and must be in electronic form
  • Agreement between lender and borrower: it is required for operations and must be in electronic form
  • Office lease agreement: it is required for registration of P2P lending if leasing of an office occurs

 
2. Finance Company Agreements

  • Financing agreement: it is required for the operation and registration of a finance company and has to be in written form
  • Cooperation agreement: it is required for the registration of a finance company if the company cooperates with a third party in terms of operation or establishment

How Cekindo can Assist

Registering a company is an important first step in establishing your startup fintech in Indonesia. You need to choose a company structure correctly to ensure that you are starting off on the right foot.

Cekindo can handle the entire process of company incorporation of your fintech startup in Indonesia: from checking the availability of business names to obtaining your business registration number.

Once your startup is incorporated, we can also provide you with a full range of corporate, legal, government, intellectual property related services.

We are here to take away unnecessary stress and burden of yours, allowing you to focus on more important business functions.

If you are interested in registering and incorporating a fintech startup in Indonesia, simply send us an inquiry by completing the form below.