By
Tuhu Nugraha
Africa-Press – Lesotho. The launch of the latest Artificial Intelligence (AI) Governance Guidelines by Indonesia’s Financial Services Authority (OJK) on April 29, 2025, has sparked critical discussions about the challenges and opportunities of AI adoption in the financial sectors of developing countries. This document sends a strong signal from OJK, encouraging Indonesian banks to actively harness AI by providing clear regulatory certainty. The document’s timing is particularly pertinent given the rapid adoption of AI across financial institutions operating in the Global South.
AI holds significant potential for driving operational efficiency, enhancing personalized financial services, and supporting financial inclusion in developing countries. Various AI applications, such as credit process automation, data-driven risk analysis, and responsive customer services, have demonstrated promising results in reducing operational costs and expanding financial access to previously underserved populations.
However, the deployment of AI also brings substantial risks, particularly regarding data privacy, algorithmic biases that may reinforce social discrimination, lack of transparency in algorithmic decision-making, and the potential for systemic disruption if AI use is not carefully overseen. These risks must be managed meticulously through robust and integrated AI governance frameworks.
Within this context, OJK’s proactive regulatory approach in Indonesia covers essential aspects such as AI ethics, algorithmic transparency, institutional accountability, and system resilience. This initiative represents a crucial step by Indonesia to tackle AI risk management challenges and can serve as an inspiring model for other developing countries. Several other countries in the Global South have also made significant strides in AI governance within the financial sector. Brazil, for example, has adopted an AI regulatory framework for banking, focusing on algorithm transparency and consumer protection. India has developed a comprehensive National AI Strategy emphasizing digital inclusion, economic empowerment, and strict oversight by the Reserve Bank of India regarding algorithmic risks and customer data security. Additionally, South Africa has begun implementing an AI framework that integrates ethical guidelines and data protection to ensure equitable benefits of AI across society.
Nonetheless, AI implementation in Global South nations is not without hurdles. Uneven digital infrastructure, limited skilled human resources, and underdeveloped legal frameworks present significant challenges. Moreover, the dominance of foreign AI technology creates technological dependency and social risks such as job displacement, where automation replaces human roles in various tasks and occupations.
Addressing these issues requires cross-sector collaboration between governments, the private sector, academia, and civil society. Engaging civil society in regulatory processes and oversight is essential to ensure inclusive AI policies and mitigate potential negative socioeconomic impacts due to uncontrolled automation. Furthermore, Global South countries must build local technological independence to reduce reliance on foreign technology.
Strategically, developing countries must adopt adaptive regulatory approaches to AI that remain open to global innovation and technology but critically tailored to local challenges. Such approaches should accommodate technological innovation while firmly upholding ethical principles, consumer protection, and social justice. Regulatory frameworks must also provide incentives and encouragement for industries to develop AI solutions that address local issues, such as enhancing financial inclusion for vulnerable groups, alleviating poverty, and improving financial literacy.
Sharing experiences and learning among developing countries is a vital step toward creating a more inclusive, fair, and sustainable AI ecosystem. This can include joint research forums, policy dialogue platforms among decision-makers, and cross-border literacy campaigns involving pentahelix stakeholders—from governments and academia to industry, media, and civil society—to ensure AI solutions are locally relevant and socially empowering across the Global South. These platforms should also actively support the development of AI technologies that are designed to address the unique challenges faced by Global South nations directly. The ultimate vision is to foster digital sovereignty and build a more just, mutually beneficial technological order—one that is grounded in local needs, aspirations, and contextual realities.
OJK’s recent guidelines serve as both a reminder and an invitation for all Global South countries to collaborate in strengthening AI regulatory capacity. Through effective cooperation, AI technology innovations in the financial sector can deliver sustainable and tangible benefits while safeguarding society from potential adverse impacts.
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