BLOCKCHAIN

Industrial financial technology (fintech) is growing rapidly in Indonesia. The Financial Services Authority (OJK) recorded transaction data using technology during 2015 reaching USD 590 billion, growing 10% compared to 2014. This growth is spurred and driven by the rapid development of various startup fintech in the country. Recognizing this innovation and transformation, OJK also prepared a fintech regulation that can encourage financial inclusion, while still taking care of consumer protection.

One type of fintech that is believed to change the future of the global financial industry is blockchain. The World Economic Forum recently explained that blockchain is one of the 10 most innovative technologies in 2016 [1]. The open and transparent nature of blockchain can simplify the way individuals and organizations transact into unbound and boundary, thus supporting the mobility of users. This technology is very appropriate for the fintech industry that involves many parties and so far still require manual paper.

"Simply put, blockchain is a distributed ledger of cloud-based digital transactions capable of recording various transaction data in real time. This transaction data will then blockchain open to multiple computer networks at once - allowing all related parties to review the data together, "said Kustiawan Kusumo, Enterprise Director, Microsoft Indonesia.

Banking is one example of an industry that will feel the strong influence of blockchain. Because, blockchain allows all banking transactions to take place anytime (24 hours) and anywhere (not necessarily come to the bank). Starting from transfer, storage and money making, credit application, international payment, to clearing. By 2016, the ratio of digital-based interaction with face-to-face ratio even reaches 400: 1. This condition will continue to grow considering the number of mobile connection usage in Indonesia reached 318 million users or 125% of the total population.

Although the dominance of the blockchain against the banking industry is so strong, banks will still not die from blockhain. For, after all, the central bank will still be needed to regulate the flow of transactions and provide business capital. Blockchain also opens up various opportunities for banking - such as reducing the need for third-party validators, modernizing banking infrastructure, and securing transactions. For example, blockchain can make it easier for banks to analyze the background of customers who apply for credit and to reduce the administrative costs of financial transactions.

Kustumwan Kusumo continued, "In mid-November, Bank Indonesia inaugurated Fintech Office, a catalyst that acts as a think-tank in the fintech industry. This inauguration reflects the government's attention and commitment to advance the fintech industry, including blockchain, in Indonesia. "

One of the unique character of blockchain is the analytical capabilities that lie behind it. The more organizations or companies that participate, including competitors, the greater the value that blockchain offers. Moreover, transactions listed in blockchain also can not be deleted or replaced. In the event of an error, the user needs to register a replacement transaction to correct it. That way, fraud, forgery, or corruption can be avoided.

"Along with the government's commitment in regulation, education to banking companies, developers, and society is also a very important step so that blockchain can be utilized as well as possible," explained Kustiawan again.

Although transparent and open, blockchain remains a secure technology because it applies cryptographic-based digital signature technology in every transaction. Each time a transaction is about to be made, the blockchain will authenticate the data of the related parties in real time before authorizing the transaction.

Microsoft also recently launched Blockchain-as-a-Service as the latest service from Microsoft Azure. "Blockchain-as-a-Service provides a fast, low-risk, and affordable platform for organizations to collaborate and experiment with in this new business process. In addition to the financial industry, several other industries such as the calibration of art goods can also take advantage of the Blockchain-as-a-Service function to avoid counterfeiting and fraud, "Kustiawan closed.

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