Indonesia, explained.
About 70% of the Indonesian multifinance sector is tied to vehicle financing (Dimas Ardian/Bloomberg via Getty Images)
With consumer credit booming, AI-driven oversight could help safeguard the economy.
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Indonesia’s SupTech experiment offers lessons for emerging marketsIndonesia’s SupTech experiment offers lessons for emerging markets
Across the world, financial regulators are racing to adapt to the explosive growth of digital lending, fintech platforms, and non-bank credit. Traditional methods of supervision, based on reports that arrive long after risks have built up, are proving too slow.
This has spurred a global turn toward Supervisory Technology (SupTech), powered by artificial intelligence. Indonesia has joined this race, launching an integrated SupTech platform and outlining a roadmap that places digital supervision at the heart of its strategy. The outcome matters not only for Indonesia’s financial stability, but also for how emerging markets around the world manage the next wave of technological disruption in finance.
Singapore has piloted anomaly detection systems to flag suspicious patterns in real time. Australia has explored predictive analytics to identify risks before they spread. India has invested heavily in integrated platforms to monitor its vast non-bank financial sector. These initiatives suggest that in Asia’s financial stability race, technology is becoming as critical for regulators as it is for the firms they oversee.
Indonesia has one of Asia’s largest multifinance sectors, making it a valuable test case for emerging markets.
Indonesia’s journey began in 2022, when the Financial Services Authority (OJK) launched OSIDA (SupTech Integrated Data Analytics) for banking supervision. The system was designed to strengthen risk-based supervision by applying big data analytics to detect risks earlier and more accurately. Earlier this year, OJK expanded OSIDA to the capital market, using advanced analytics and AI to strengthen investor protection and market integrity. Together, these steps mark Indonesia’s commitment to embedding digital tools across its supervisory architecture.
The next frontier is the multifinance sector, institutions that offer a range of financial services including loans, leases or credit. In 2024, OJK unveiled its Roadmap for Multifinance Companies 2024–28, which explicitly highlights digitalisation and SupTech as pillars for strengthening the industry. As of May 2025, Indonesia’s multifinance sector managed more than Rp500 trillion (approximately US$32 billion) in assets, with about 70% tied to vehicle financing – making it central to household consumption and an urgent test case for AI-driven oversight.
Applying SupTech to multifinance could transform supervision. Machine learning models could flag rising default risks in specific regions, detect unusual lending concentrations, or simulate the impact of macroeconomic shocks on non-bank lenders. Such tools would reduce the likelihood of systemic risks building up unnoticed.
ATM machine operations are falling in Indonesia as digital transactions become more widespread (Aman Rochman/NurPhoto via Getty Images)
The opportunities are clear. SupTech could help Indonesia manage the rapid growth of consumer credit outside the banking system, safeguarding stability while preserving financial inclusion. It could also level the playing field, ensuring that both large and small finance companies face consistent data-driven oversight.
But the challenges remain significant. Data quality across multifinance firms is uneven. Some companies maintain sophisticated digital systems, while others still rely on patchy or outdated reporting. Without consistent standards, algorithms may produce misleading signals. Regulators also face a skills gap: building and maintaining AI-based tools requires expertise in data science, cybersecurity, and governance that supervisory agencies are still developing.
There are also broader risks. Overreliance on “black box” models could undermine accountability if regulators cannot explain why a particular firm was flagged. And in an era of rising cyber threats, SupTech systems themselves could become targets, exposing sensitive financial data.
Indonesia’s phased rollout – first banking, then capital markets, and now a roadmap for multifinance – offers important lessons. It shows how regulators in emerging markets can scale technology step by step, using experience in one sector to inform expansion into others. At the same time, it underscores that digital supervision is not just about tools but also about governance, capacity, and public trust.
The regional stakes are high. Indonesia has one of Asia’s largest multifinance sectors, making it a valuable test case for emerging markets. If successful, its model could inspire regulators in the Philippines, Vietnam, and Thailand, where non-bank credit is also expanding rapidly. If it falters, doubts will grow about whether SupTech can be scaled beyond advanced economies.
Geopolitics adds another layer. Just as fintech has become a field of competition among private firms, regulatory technology may become a marker of influence among states. Countries that can build trusted, effective SupTech platforms will not only protect their own stability but also set regional norms for oversight. In this sense, the competition is no longer only about who innovates in finance, but also about who innovates in regulation.
Indonesia now stands at a crossroads. With OSIDA, it has shown that digital supervision is not a distant aspiration but a present reality. With the multifinance roadmap, it has signalled where this technology is headed next. The question is whether it can extend this capability effectively to a sector that touches millions of households. If it succeeds, Indonesia could join the front ranks of Asia-Pacific regulators shaping the future of oversight. If it fails, it risks being left behind as financial innovation races ahead.
The lesson is simple: in today’s fast-moving financial landscape, regulation cannot afford to remain slow. SupTech is not an experiment but a necessity, and Indonesia’s next step will determine whether it keeps pace – or falls behind – in the global race for financial stability.
About the author
Hanif Santoso
Hanif Santoso is a senior manager in financial supervision at Indonesia’s Financial Services Authority (OJK), where he focuses on the oversight of financing and venture capital companies.
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