Indonesia’s financial sector has taken a major step forward in its digital transformation journey with the release of a detailed governance framework for artificial intelligence (AI) in banking. The publication, titled “Tata Kelola Kecerdasan Artifisial Perbankan Indonesia” (AI Governance in Indonesian Banking), sets out clear principles, roles, and responsibilities aimed at ensuring the ethical, accountable, and secure use of AI by financial institutions.
The document, released by the Indonesian Financial Services Authority (OJK) in collaboration with industry experts and stakeholders, outlines the need for a structured approach to AI adoption in the banking sector. It emphasizes that as AI systems become more sophisticated—powering everything from credit scoring and fraud detection to chatbots and risk modeling—governance must evolve to address potential risks related to privacy, fairness, and transparency.
At the heart of the framework is a commitment to responsible innovation. Financial institutions are encouraged to adopt AI in a way that enhances efficiency and customer service without compromising security or ethical integrity. The guidelines promote human-centric AI, calling for systems that are understandable, auditable, and aligned with broader societal values.
One of the key components of the governance framework is risk classification. The guidelines categorize AI systems based on their potential impact, with higher-risk applications—such as those affecting lending decisions or financial stability—subject to stricter oversight. Institutions are expected to perform regular risk assessments and develop mitigation strategies tailored to the AI system’s complexity and criticality.
To ensure accountability, the document establishes roles for multiple actors within financial institutions. Board members are tasked with setting strategic AI priorities, while senior management is responsible for operational execution and compliance. A designated AI Governance Officer or committee is recommended to oversee implementation and ensure adherence to ethical and legal standards.
Transparency is another cornerstone of the framework. Institutions must ensure that their AI systems are explainable, particularly in decisions that directly affect customers. The framework calls for documentation of data sources, model logic, and decision-making processes, as well as mechanisms for human review and customer appeals in high-stakes cases.
Data governance plays a critical role, with the guidelines stressing the importance of high-quality, representative data to avoid bias and ensure accurate outcomes. Institutions are urged to implement data validation protocols, privacy safeguards, and continuous monitoring to address potential drift in model performance.
The framework also addresses the importance of cybersecurity and resilience. As AI systems become more integrated into core banking infrastructure, they become potential targets for malicious actors. The document recommends robust access controls, regular testing, and incident response plans to ensure system integrity and minimize downtime.
To foster a culture of continuous improvement, the guidelines recommend capacity building and AI literacy programs across all levels of the organization. Institutions are encouraged to collaborate with academia and regulators to stay abreast of emerging best practices and technological advancements.
The governance framework aligns closely with international efforts such as those led by the OECD, the Financial Stability Board, and the EU AI Act, reflecting Indonesia’s commitment to global AI standards while tailoring the approach to local regulatory and cultural contexts.
By providing a detailed blueprint for AI oversight, Indonesia’s financial regulators aim to build public trust in digital banking services and support sustainable innovation. The framework represents not just a regulatory milestone, but a strategic effort to ensure that AI contributes positively to the resilience, inclusivity, and competitiveness of Indonesia’s financial ecosystem.
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If you’re concerned or have questions about how to navigate the Indonesian or global AI regulatory landscape, don’t hesitate to reach out to BABL AI. Their Audit Experts can offer valuable insight and ensure you’re informed and compliant.
