OJK Intensively Encourages the Use of Electronic Signatures for Digital Finance

The Financial Services Authority (OJK) is aggressively encouraging the use of electronic signatures to ensure the security and validity of digital transactions in the financial services sector which tends to have a high risk of fraud.

In his official statement, Head of the OJK Financing Institutions and Special Financial Institutions Supervision Department, Ahmad Nasrullah, revealed that he was inviting discussions with Kominfo to further discuss the implementation of Article 17 Paragraph 2a of the 2024 ITE Law which contains the application of electronic signatures.

Please note, Law Number 1 of 2024 concerning the Second Amendment to Law Number 11 of 2008 concerning Information and Electronic Transactions (ITE) contains a number of new articles that regulate the use of electronic signatures.

Article 17 Paragraph 2a contains electronic transactions that have a high risk for the parties using electronic signatures secured by electronic certificates. One of the high-risk electronic transactions is digital financial transactions.

"Furthermore, OJK will follow up, especially on P2P Lending arrangements. "Thus, with regard to the BNPL (Buy Now Pay Later) business process or other digital financial transactions carried out without face-to-face, it is included in the category of high-risk electronic transactions which require the use of certified digital signatures," he said at the National Seminar of the Association of Indonesian Financing Companies (APPI). ) in Bali early March.

Based on findings Kominfo, there were 486.000 public reports related to information crimes and electronic transactions during 2017–2022. This number was dominated by online transactions with 405.000 reports.

Meanwhile, Alternative Dispute Resolution Institutions in the Financial Services Sector (LAPS SJK) received and handled 2.501 complaints in 2023, also dominated by reports related to fraud.

Ecosystem development

The ecosystem of electronic signature providers grows in line with the development of digital services in Indonesia, from services E-commerce, transportation, to financial services. PrivyID is one of the early players offering digital signature solutions.

In interview with DailySocial.id in 2016, Founder and CEO of PrivyID Marshal Pribadi revealed that at that time awareness and education are still the main obstacles to the adoption of electronic signatures, especially for the individual segment.

Now, certified electronic signatures have been recognized as having legal force like wet signatures because they are accompanied by a guarantee of the validity of the identity of the signer of the electronic document.

One of its advantages is that it can be recorded and stored digitally making it difficult to forge and manipulate to minimize the risk of creating fake documents. Electronic signatures also have them tracking accurate affixing times which are important for transaction, legal and investment processes.

Several providers of Electronic Certification (PSrE) at Kominfo and registered with the OJK as Digital Financial Innovation Organizers for the Regtech E-Sign cluster are Privy, Tilaka, Xignature, and Vida.