Digitalization, Emerging Technologies, and Financial Stability: Challenges and Opportunities for the Indonesian Banking Sector and Beyond

Muyanja Ssenyonga Jameaba

MPRA Paper from University Library of Munich, Germany

Abstract: Today’s financial institutions have to adapt to changing business environment, increasingly demanding and differentiated customer preferences, and digitalization and technological changes. Using a documentary analysis approach, the article navigates the implications of the adoption of distributed ledger technology (BCT) on functions and performance of the general banking sector and financial system stability. Results underscore the role of DLT adoption in fundamentally changing the financial service development and delivery landscape, operations, providers, regulatory regime, and performance. DLT adoption is envisaged to trigger the entry of new non-bank providers, facilitate the development of collaborative financial innovations and operations, adoption of new business models that support open banking principles, maintain the leveraging of Big Data and data analytics. Consequently, banks have a diversified customer base, strengthened capacity and capabilities to leverage customer experience , fostering the development and deployment of financial innovations that bolster competitiveness. Moreover, DLT adoption has the potential to enhance the integrity and authenticity of financial service delivery, reduce vulnerability to cyber insecurity and financial fraud, foster decentralized authentication of financial transactions, increase operational efficiency, lower compliance cost, shorten onboarding of new product offers and customers, accelerate new product development and deployment. Moreover, DLT adoption enables traditional banks to protect their interest and non-interest income sources from new and nimbler players, bolsters banks’ financial intermediation and monetary policy transmission functions, widens banks’ ability to provide wealth custodianship services, fosters the provision of financial payments services to wider, diversified and transboundary clientele, and strengthen bank’s role in maintaining financial system stability

Keywords: Blockchain; CBDC; crypto assets; digitalization; Fintechs; emerging technologies; open banking; P2P lending (search for similar items in EconPapers)
JEL-codes: E52 G21 G28 O32 O33 (search for similar items in EconPapers)
Date: 2024, Revised 2025-09-26
New Economics Papers: this item is included in nep-inv, nep-pay and nep-sea
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