Liability of Banking Parties in Internet Banking Facilities

Tri Murti Lubis

, Syarifah Lisa Andriati

and Faradila Yulistari Sitepu

Law Department, Universitas Sumatera Utara, Dr. Mansyur Street, Medan, Indonesia

Keywords: Bank, Internet Banking, Banking Law.

Abstract: The banking institution is the core of the financial system of each country. The Bank is a financial

institution that becomes the place for individual, private business entities, state-owned enterprises, and even

governmental institutions to keep the funds they own. Through lending activities and various services

provided, the bank serves the financing activities as well as launches a payment system mechanism for all

sectors of the economy. Internet banking is a delivery channel in the banking industry, and civic

relationships arising from the internet banking. Every provider of an electronic system is required to

provide a reliable and secure electronic system and is responsible for the proper operation of electronic

systems. The method used in this research is the normative juridical approach. The normative juridical

research method is a method that refers to applicable legal norms. In Indonesian laws, there is no specific

and clear regulation regarding internet banking. However, the discussion about the need for clear rules

governing internet banking issues has been widely reviewed and discussed. In the Act of Electronic

Transaction Information (ITE Act), not even a chapter that regulates internet banking. However, there are

articles on the transactions using the internet media. The arrangement of internet banking cannot be

separated from the Banking Law No. 7 of 1992 and its amendment laws of Law No. 10 of 1998. To

minimize the risks in Internet Banking, the Financial Services Authority, having the supervision authority

over Indonesian banks as well as banks outside Indonesia, should always update the regulation regarding the

implementation of risk management in the banking system and conduct active monitoring on the risk

management implementation conducted by banks in Indonesia.

1 INTRODUCTION

The banking institution is the core of the financial

system of each country. The Bank is a financial

institution that becomes the place of the

individual,private business entities, state owned

enterprises, and even governmental institutions to

keep the funds they own. Through lending activities

and various services provided, the bank serves the

financing activities as well as launches a payment

system mechanism for all sectors of the economy

(Abdurachman, 1993).

Banking is one of the pillars of Indonesia's

economic development. The milestone of the

Banking law was enacted since the issuance of Law

No. 14 of 1967 on the Banking Principles which has

been amended by Act No. 7 of 1992 regarding

Banking and subsequently amended by Law Number

10 of 1998 on the amendment upon Act Number 7of

1992 concerning Banking (hereinafter referred to as

the Banking Law).

A bank is a business entity that collects and

distributes public funds, so in terms of operation,

Banks require the trust and support from the

community. The relationship between the bank and

the customer is based on the trust principle of the

community. Therefore, without the support of the

community, it will be challenging for the bank to be

able to run its business smoothly. The legal

relationship that exists between these banks and the

customers may result in a legal problem.

The development of the banking world has

evolved significantly. The rapid development of the

banking world is heavily influenced by various

factors, one of which is the technological factor. The

use of technology in the banking world today is a

must. The demands for fast information require

banks to create a technology that can improve the

bank performance. Along with the technological

advances, the banking world creates a system that

implements the Internet as an intermediary media

called Internet Banking or also called E-Banking.

Lubis, T., Andriati, S. and Sitepu, F.

Liability of Banking Parties in Internet Banking Facilities.

DOI: 10.5220/0010090016011605

In Proceedings of the International Conference of Science, Technology, Engineering, Environmental and Ramiﬁcation Researches (ICOSTEERR 2018) - Research in Industry 4.0, pages

1601-1605

ISBN: 978-989-758-449-7

1601

Internet Banking is a new strategic tool in the

sector of global banking to attract customers and

increase customer satisfaction in the field of

financial services. Over time and the development

of information technology, telecommunications led

to the emerging of a business application on internet

banking basis. Internet banking is one of the banking

services that allow customers to obtain information,

communicate and conduct banking transactions

through the Internet, and is not a bank that only

provides banking services through the internet The

problem statement of this research is the liability of

the banking party on the loss experienced by the

internet banking users.

2 RESEARCH METHODOLOGY

The proposed method used in this research is the

normative juridical approach. The normative

juridical research method is the legal research that

states the law as a norm system. Data from this study

are secondary data consisting of; a) the materials of

primary legislation in the form of constitutional law;

b) the materials of the secondary law in the form of

scripts, both in the form of books and articles that

contain commentary or analysis related to the

subject matter; c) the materials of the tertiary law in

the form of dictionary. Data were collected using

literature reviews and document analysis. The data

were analysed using qualitative methods based on t

he logic of deductive reasoning.

3 RESULT AND DISCUSSION

3.1 The Basis of Accountability Laws

against Banking Consumers

According to the Law of the Republic of Indonesia

No 10 of 1998 on Banking, it can be concluded that

the banking business includes three activities, i.e.,

raising funds, channeling funds, and providing other

bank services. The activities of collecting and

channeling funds are the principal activities of a

bank while providing other bank services is

considered as supporting activities. The activity of

collecting the funds is performed by acquiring the

funds from the community in the form of savings

accounts, cheques, and deposits, with the addition of

being given attractive rewards, flowers, and gifts as

a stimulus for the community, while the activity of

channeling funds is in the form of lending money to

the consumers. Meanwhile, other banking services

are provided to support the operations of the main

activities.

In conducting its business the bank is obliged to

implement the principle of prudence. It is stipulated

in article 29 paragraph (2) and paragraph (3) of Law

Number 7 of 1992. Furthermore, in Article

paragraph (4) and paragraph (5), it is stated that the

bank serves to provide credit and other business

activities In this case, banks are required to take

measures that do not harm the bank and the interests

of customers who entrust their funds to the bank, as

well as the bank role as intermediaries in providing

information on possible risks of losses that may

occur as a result of the customer transactions

conducted through the bank.

If in conducting its business, the bank has

neglected the obligation as stipulated in article 29

paragraph (2), (3), (4), and (5) of Law Number 7

Year 1992, and resulting in consumer losses, the

bank is obliged to replace the funds along with the

cost of compensation and interest to the consumer.

3.2 Legal Protection of Internet

Banking User

In order to protect customers in the use of internet

banking services, the Law No. 8 of 1999 on

Consumer Protection can also be associated with the

implementation of internet banking. In this case, the

company in question is the bank, and the intended

consumer is the bank client.

In the implementation, two regulations are

utilized in the internet banking, namely self-

regulation and government regulation. Self-

regulation is a rule that is usually formed by the

parties to anticipate the vacuum of law to protect the

customers and the banks in internet banking service,

while government regulation is a rule formed by the

government to protect both the customers and banks

of the internet banking service.

In general, the Banking operations in Indonesia,

especially in terms of internet banking, implement

the self-regulation, since Indonesia government does

not have regulations that specifically regulate

internet banking to protect the consumer interests,

resulting in the bank to make its regulations that are

deemed fair in protecting interests of both parties.

The rules of self-regulation specifically include

the substantive rules to ensure that the consumer (the

bank client) knows that the company (the bank)

meets the requirements.

Although the self-regulation rules have been

created by many banks that provide internet banking

ICOSTEERR 2018 - International Conference of Science, Technology, Engineering, Environmental and Ramiﬁcation Researches

1602

services, it is essential to have the government

regulations that thoroughly organize the activities of

internet banking. Furthermore, the contents of the

self-regulation of the banks will be different since

each bank set its own rules. The articles of law to be

formed should include clear regulations regarding

internet banking, particularly on the customers'

protection in internet banking service. With the

establishment of precise rules and regulations,

specifically managing the internet banking activities,

it is expected to protect the interests of the customers

and the banks in a balanced manner.

In Law No. 11 of 2008 on the ITE Act is a law

established to specifically regulate various human

activities in the field of information and

communication technology, including some criminal

acts that are categorized as cybercrime. The ITE Act

passed on 21 April 2008 is considered sufficient to

manage legal issues of the Internet banking system

as one of the banking services formed by the

technological advances. Obstacles such as the

technological and legal aspects no longer become

the inhibiting factors in the development of Internet

banking in Indonesia. Although the articles of ITE

Act have no specific article which arranges the

activities of Internet banking, there are several

regulations governing the transaction using the

Internet media.

Every provider of electronic systems is required

to provide a secure and reliable electronic system

and is responsible for the system to operate properly.

"Reliable" means the electronic system has the

ability that matches with the needs of its users.

"Secure" means that the electronic system is

physically and non-physically protected. "Properly

operated" means the electronic system has the ability

in accordance with its specifications.

Responsible means there is law regulations that

legally control the implementation of the electronic

system. However, such provision shall not be

applicable in the event of proven circumstances of

force, error, or negligence of the users of electronic

systems. The ITE Act also stipulates that, as long as

a separate law does not determine it, every operator

of an electronic system shall operate an electronic

system that meets the following minimum

requirements:

1. Able to re-display the electronic information or

electronic documents in full form according to

the retention period specified by the law;

2. Able to protect the availability, integrity,

authenticity, confidentiality, and accessibility

of electronic information in the electronic

system;

3. Able to operate under the procedures or

instructions of the electronic systems;

4. Equipped with procedures or instructions that

are written with language, information or

symbols that can be understood by all parties of

the electronic systems;

5. Have a sustainable mechanism to maintain the

novelty, clarity, and responsibility of the

procedures or products.

In ITE Act, there is no clear Article governing

about internet banking. However, there is an Article

on the transactions using the internet media. In the

general provisions of the ITE Law, Article 1(2)

states that electronic transactions are legal acts

committed using computers, computer networks, or

other electronic media. An article in ITE related to

internet banking is Article 15, which states:

1. Each Operator of the electronic system shall

administer a reliable and secure electronic

system and shall be responsible for the proper

operating electronic system;

2. The operator of the electronic system is

responsible for the management of the

electronic system.

3.3 The Responsibility of Banking

Party on the Internet Banking

Facilities

The activities of internet banking may contain high

risks. Internet banking is a distribution channel that

provides opportunities for the banks to broaden their

reach, improve the customer experience and reduce

operational costs. Although internet banking

services offer amenity, internet banking also has

numerous risks. In the implementation, internet

banking often neglects the security matters (both

technically and non-technically) resulting in

numerous problems.

The most recent case occurred as quoted in

consumer media, a customer of Indonesia Nation

Bank (BNI), did a transfer transaction using internet

banking facility from BNI on August 5, 2018. At

that time, the transfer was declared successful, and

the consumer kept the proof of the transfer.

However, about a week later the customer was

informed that the funds had not been credited to the

destination account, whereas the customer account

balances have been cut off. On January 15, the

consumer reported this problem to the BNI Call

Centre.

The impact of these risks can be attributed to a

system that is not efficient at the time of its

Liability of Banking Parties in Internet Banking Facilities

1603

operation. Risks that may arise, either directly or

indirectly, may result in losses for the banks and

communities, especially customers using the internet

banking services.

Essentially, internet banking does not pose new

risks that are different from banking service products

through other media, but it is proven that internet

banking increases the risk. Of all the risks mentioned

above, the internet banking in particular increases

the strategic risk, transactional risk including

security, legal and reputation risks. Therefore, in

addition, to improve the customer experiences of

these internet banking services, the banks should

identify, measure, monitor, and control these risks

with the precautionary principle.

In Article No. 4 of the Regulation of Financial

Services Authority Number 38 /POJK.03/2016 on

the Implementation of Risk Management in the Use

of Information Technology By Commercial Banks

states that the Bank is required to establish clear

authority and responsibilities of the Board of

Directors, Board of Commissioners and officials of

each employment level related to the use of

Information Technology.

If the bank has reported on Incidental reporting as

in Article 31 POJK No. 38 / POJK.03 / 2016, the

Financial Services Authority (OJK) will conduct

legal defense as contained in Article 30 of Act no.

21 of 2011 on the Financial Services Authority

which states as follows:

1. For consumer and community protection,

OJK is authorized to defend the law, which

includes:

a. Order or perform certain actions on the

Financial Services Institution to resolve

customer complaints harmed by the

Financial Services Institution;

b. File a lawsuit:

(1) To reclaim the property of the

damaged party from the liable

party, either under the control of

the liable party or the control of a

third party; or

(2) To obtain indemnification from

the liable party to the consumer or

the Financial Services Institution

as a result of the violation of the

laws in the financial services

sector.

2. The indemnity referred to in paragraph (1)

point b No. 2 is only used for the

compensation paid to the damaged party.

As the principle in building an internet banking

system, the banking financial institution must

provide a real-time internet banking service facility

and cross-channel view of all customer information.

Thus, the banking financial institution can respond

immediately to any consumer activity or transaction,

improve customer experience, provide opportunities

for cross-selling profits, and also with internet

banking service; the institutions are expected to

enter the next generation of retail banking.

In developing an electronic system, the legal

aspects should also take into account. The security

of this electronic system depends not only on how

far the potential risk can be minimized but also

depending on how far it meets the legal obligations.

At the time the electronic system was launched to

the public, the legal liability aspects should be a

primary concern and under the precautionary

principle. This is per Article 3 of the ITE Law which

states as follows

"Utilization of information technology and

electronic transactions is implemented based on

legal certainty, benefits, prudence, trust, and

technology neutral."

Based on the previous descriptions above

associated with Article 3 of the ITE Law, if there is

an act that violates the principles of the electronic

system, it can be categorized as an offense.

Regarding alternative dispute resolutions, the

OJK shall issue OJK Regulation Number 1 /

POJK.07 / 2014 concerning Alternative Dispute

Settlement Institution in Financial Services Sector.

In the event of a consumer complaint, the complaint

must be settled in advance by financial services

institutions. In case no agreement is reached, the

consumer and the financial service institution may

settle disputes outside the court or through courts

either through mediation, adjudication, and

arbitration.

4 CONCLUSIONS

In the Indonesian legal regulation, there is no

specific and clear regulation regarding internet

banking. However, the discussion about the need for

a thorough law governing internet banking issues

has been widely studied and discussed. In the ITE

Law, there is no definite article about internet

banking. However, there are articles on the

transactions using the internet media. Internet

banking arrangement cannot be separated from the

Banking Act Number 7 of 1992 and its amendment

laws of Act Number 10 of 1998. In order to

ICOSTEERR 2018 - International Conference of Science, Technology, Engineering, Environmental and Ramiﬁcation Researches

1604

minimize the risks in Internet Banking, the Financial

Services Authority, having the authority over

Indonesian banks as well as banks outside Indonesia,

should always update the regulation regarding the

implementation of risk management in the banking

system and conduct effective supervision of the

implementation of risk management conducted by

the banks in Indonesia.

REFERENCES

A.Abdurrachman, 1993.Ensiklopedia Ekonomi Keuangan

Perdagangan, Pradnya Paramita, Jakarta.

Allen H. L., 2002.Perbankan Elektronik, Rineka Cipta,

Jakarta.

Hermansyah, 2006.Hukum Perbankan Nasional

Indonesia, Kencana Media Group, Jakarta.

.Himani, S., 2001. Bankers’ Perspectives on E-

Bankingand Its Challenges : Evidance from North

India. The IUP Journal of Bank Management, Vol X

(4) No 4. Akuntansi Bisnis, Vol. XI (22), 238-248.

Indonesia (Informasi dan Transaksi Elektronik),Undang-

Undangtentang Informasi dan Transaksi Elektronik,

Nomor 11 Tahun 2008, LN Tahun 2008 Nomor 58,

TLN Nomor 4843, Pasal 15 Ayat (1).

Paula B., 2018. “Elements of effetive Self-Regulation for

Protection of Privacy”, dikutip dari

http://www.ntia.doc.gov/reports/privacydraft/198dftpri

n.htm.

Ronaldo, E. & Hudi, P., 2013. Pengaruh Internet Banking

Terhadap Kinerja Perbankan di Indonesia (Studi

Empiris Pada Bank yang Listing di BEI), Jurnal

Akuntansi Bisnis, Vol. XI (22), 238-248.

Liability of Banking Parties in Internet Banking Facilities

1605