The Future of Collaboration between Fintech and Banks with Open Finance API Implementation in IndonesiaThe rise of fintechs in Indonesia is not only caused by the rapid development of information technology which is driving innovation in the financial services sector, but also by the wide range of opportunities offered by the fintechs themselves. Looking back today, fintechs have clearly shown a great contribution to the financial independence of individuals as well as the financial stability of the country, especially in the midst of this pandemic season. From payment instruments, lending tools, deposit devices, to financial planners, fintechs have successfully enabled faster and cheaper distribution of financial services and products. Fintechs are bridging the current financial inclusion and literacy gaps by offering alternative services and products to everyone, including unbanked consumers. Those who are unbanked for any reason now have access to financial services and products that were previously only available to banked consumers. Fintechs also help micro, small, and medium-sized enterprises (MSMEs) develop their businesses, for example by enabling faster loan approval as is the case with peer-to-peer lending platforms. Thus beyond all these benefits, supporting the fintechs growth and forging their future should be a part of the current discussion, especially among regulators. It is undeniable that regulators continue to play an important role in supporting the sustainability of fintechs in the future. Collaboration and regulation are two homework tasks that regulators need to do to secure the future of fintechs. By encouraging collaboration, regulators are helping both the incumbent financial services (banking institutions, the finance and investment industry, and insurance companies) and fintechs to focus on their respective strengths so that they can continue offering the best services and products to consumers. Furthermore, considering the unified national payment system by 2025, as mentioned by BI Payment System Policy Executive Director, regulators should strengthen the collaboration between the two by enabling the Open Finance System through The Financial Data API. Establishing The Financial Data API gives both fintechs and incumbent financial services permission to connect data from multiple platforms, including formal and informal financial services, digital assets, and e-commerce, and track both income and transaction history of consumers anywhere, anytime. However, financial inclusion through the Open Finance System has certainly raised concerns among some industry players and analysts even though the Financial Data API, including Brick, is a reliable technology. They question how to balance innovation with the integrity of financial services and customer protection. In response, regulators should develop an open finance ecosystem that encourages innovation while guiding all stakeholders to act responsibly. This means that regulators need to build infrastructures, such as data centers, sandboxes, and clouds, and also develop policies that support innovation and protection simultaneously. According to a survey conducted by Daily Social in 2018, the adoption of policies by regulators has been somewhat slow. In the meantime, policies are very important because a good policy ensures consumer protection and a healthy financial system. Here are several policies on the open finance ecosystem that regulators should adopt in order to secure the future of fintechs. First and foremost, regulators should accelerate the development of Open API standardization initiated by BI since the first quarter of 2020. The Deputy Governor of Bank Indonesia, Doni P. Joewono, stated that the successful development of Open API standardization which is implemented in Open API Payment Standards requires the role of regulators to drive participation, collaboration and commitment of various parties. All the players need to sit down and discuss how to proceed and identify the business patterns as well as the risks that exist in this segment sooner. In short, Open API standardization includes data standards, technical standards, and security standards as well as governance standards. Second, regulators should also develop policies to protect consumers while they are doing their transactions. We know that cybersecurity risks remain a huge threat that discourages consumers from using fintechs although financial services and products become cheaper and faster through Financial Data API. A lack of security, from security standards, data protection to consumer approvals and cloud policies can certainly harm consumers. It would also mean that anyone with an internet connection could misuse consumer data. Also, lack of risk management and mitigation when consumer violation happened has doubled their reluctance to use fintechs since they have no complaint mechanism. Therefore, consumer protection is another important policy needed to build a sound open finance ecosystem that supports the sustainability of fintechs. Last but not least, anti-money laundering, anti-fraud, and anti-terrorist financing policies must also be tightened but efficient to support the registration process of fintech companies and track all their transactions. The basic idea is that these policies ensure that all fintech companies enabling Financial Data API are registered and regulated by the relevant authorities. This way, the financial inclusion they offer by implementing the Open Finance System can still be monitored and prevented from being used by criminals. This not only ensures the integrity of the payment system but also supports economic stability. Ultimately, the regulated collaboration between fintechs and the established financial services through Financial Data API secures the future of fintechs and also benefits consumers by providing faster, more convenient, affordable, secure, and reliable financial services and products. ***