CIPS: The risk of using “Innovative Credit Scoring” needs to be watched out for

Jakarta ( – Head of Economic Opportunities Research Center for Indonesian Policy Studies (CIPS) Trissia Wijaya said the risks of using Innovative Credit Scoring (ICS) need to be watched out for, even though credit scoring with artificial intelligence can broaden financial inclusion.

Several risks follow the use of ICS, including the use of private data and bias in the algorithm.

“For this reason, regulations are needed that provide clarity regarding the roles and responsibilities of ICS data providers and users,” said Trissia in an official statement, Friday.

Recent CIPS research recommends that OJK reassess program effectiveness Regulatory Sandbox which has been implemented for four years since the enactment of OJK Regulation Number 13 of 2018 concerning Digital Financial Innovation in the Financial Services Sector.

Regulatory Sandbox OJK and AFTECH’s independent regulation have been the basis for evaluating ICS company compliance in risk management, including the risk of using personal data.

During the trial period sandboxICS companies are required to adopt self-assessment principles and submit regular self-monitoring reports and collaborate with OJK in assessing this business.

“Even though it involves a complex process like this, the scheme Regulatory Sandbox seems unable to keep up with developments in the regulatory needs of the ICS sector,” he said.

He considered that the OJK also needs to oversee an integrated data sharing mechanism between ICS and traditional credit bureaus in Indonesia, as well as develop operational guidelines (toolkit) regarding data sharing strategies.

ICS service providers that can operate in multiple sectors through collaboration with private credit bureaus are also seen as being out of scope Regulatory Sandbox.

“Therefore, the government needs to prioritize the establishment of a personal data protection agency (PDP) during the transition period of the PDP Law. This institution is needed to carry out routine checks on all parties involved in ICS, especially regarding data used and shared by data controllers and users,” he said.

Reporter: Sanya Dinda Susanti
Editor: Adi Blueardi


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