From AI Governance to Consumer Protection: Reconstructing Indonesia’s Regulatory Framework for Artificial Intelligence in Banking
Abstract
The growing integration of Artificial Intelligence (AI) into Indonesia’s banking sector has enhanced financial innovation and operational efficiency while generating significant legal challenges for consumer protection. Although existing legislation provides general safeguards and the Financial Services Authority (OJK) has introduced AI governance for banking, a regulatory gap remains between principle-based AI governance and enforceable protection against algorithmic risks. This study aims to assess the adequacy of Indonesia’s existing legal framework for protecting banking consumers and to formulate a more accountable and consumer-oriented regulatory framework. Employing normative legal research, this study applies statutory, conceptual, and comparative approaches by examining Indonesian legal instruments alongside AI governance frameworks in the European Union, Singapore, Japan, Canada, South Korea, and the United States. The findings demonstrate that Indonesia’s emerging framework recognizes fairness, transparency, accountability, and responsible AI governance, but has yet to fully translate these principles into enforceable consumer rights concerning algorithmic decisions, explainability, oversight, and redress. Unlike previous studies emphasizing the absence of AI-specific regulation, this study identifies the transition from AI governance principles toward enforceable consumer protection as the critical regulatory challenge. It concludes that Indonesia requires a risk-based and consumer-oriented framework integrating algorithmic accountability, transparency, human oversight, and effective redress mechanisms.
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DOI: http://dx.doi.org/10.26532/jph.v13i2.48805
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