The Financial Services Authority of Indonesia (OJK) launched the Indonesian Banking Artificial Intelligence Governance Framework, emphasizing the responsible integration of AI in the banking sector (29/4).

The initiative, led by OJK’s Executive Director for Banking Supervision, Dian Ediana Rae, aims to ensure that AI technologies are developed and implemented in compliance with ethical standards, safety protocols, and regulations.

This framework encourages banks to adopt AI tools while carefully managing associated risks.

Indonesia's AI Governance Framework for the Banking Sector

The Indonesian AI Governance Framework serves as a comprehensive guide for the banking industry, ensuring that AI is applied responsibly across various banking functions.

These include customer interactions, product development, pricing, compliance, risk management, fraud prevention, and data analytics. As AI adoption increases, its use mustn’t compromise customer trust or systemic stability.

The OJK’s guidance guarantees that AI systems in banks remain secure, effective, and compliant with regulatory standards.

The Role of AI in Accelerating Digital Transformation in Banking

AI is playing a pivotal role in accelerating digital transformation within Indonesia’s banking sector. The technology is expected to significantly enhance operational efficiency and service quality.

However, the application of AI also introduces risks, such as data privacy concerns and potential security vulnerabilities.

Thus, responsible AI implementation is essential to avoid these risks while achieving the benefits of automation, improved decision-making, and streamlined banking processes.

Aligning AI Implementation with International Best Practices

The AI Governance Framework is built on international best practices, including the European Union's AI Act and the Basel Committee on Banking Supervision (BCBS) guidance.

These global standards provide a strong foundation for Indonesia’s AI adoption strategy. In addition, the framework incorporates lessons from the US, China, Singapore, and Japan to ensure that AI use in banking aligns with global regulatory trends.

Furthermore, the framework reflects Indonesia’s commitment to safeguarding personal data, following the guidelines set out in the 2022 Personal Data Protection Law.

PHOTO: OJK

This article was created with AI assistance.