Credit scoring in Indonesia is undergoing a significant transformation, shifting beyond traditional methods to embrace innovative methodologies. While conventional systems rely primarily on credit registries like Financial Information Services System (Sistem Layanan Informasi Keuangan or SLIK) and Private Credit Bureaux (Lembaga Pengelola Informasi Perkreditan or LPIP), regulated under the Financial Services Authority (Otoritas Jasa Keuangan or OJK), Innovative Credit Scoring (ICS) leverages alternative data sources such as social media and digital transactions to assess creditworthiness. This cutting-edge approach expands access to credit for individuals with limited conventional credit histories.

For a long time, ICS operated in a regulatory gray area. However, with the recent issuance of OJK Regulation Number 29 of 2024 concerning on Alternative Credit Scoring, the industry is now confronted with both unique challenges and new opportunities, as it enters a more structured regulatory environment.

Authored by Dentons HPRP's legal experts Andre Rahadian (Partner), Mika Isac  Kriyasa (Partner), and Kevin Silitonga (Associate), this article explores the complexities of ICS, including current practices, regulatory analysis, and personal data protection concerns. Offering insights into licensing processes, data governance, and the future trajectory of ICS, the authors provide invaluable guidance for stakeholders navigating this evolving landscape.

Read the full article here.

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