Fintech WeLab acquires Bank Jasa Jakarta to launch Indonesian digital bank

HONG KONG-based fintech startup WeLab is leading a consortium to acquire Indonesian Bank Jasa Jakarta (BJJ) to launch a digital bank in Indonesia.

WeLab is an online lending platform with operations in Hong Kong and China, and also operates Hong Kong digital bank, WeLab Bank. With 50 million users and over US$10 billion worth of loans dispensed, it is the largest online lender in Hong Kong. WeLab also has over 150,000 digital banking customers in Hong Kong and boasts a monthly active user rate of 56 per cent according to Simon Loong, founder and chief executive of WeLab.

The fintech startup has tapped new and existing investors, raising US$240 million to acquire the bank and fund tech investments in setting up and running its second digital bank. The upcoming digital bank would be WeLab's second venture into Indonesia, after Maucash - a joint venture with Indonesian conglomerate Astra to provide mobile lending in the island archipelago.

This move follows others like Gojek acquiring a stake in Bank Jago, and Sea acquiring Bank Kesejahteraan Ekonomi. All are looking to get a slice of the estimated 77 per cent of underserved and unserved banking customers in Indonesia.

With Indonesia's Financial Services Authority (OJK) not issuing digital bank licences, to enter the Indonesian market would mean to buy any one of the many troubled banks in Indonesia. However, BJJ is not a troubled bank according to Loong.

"Bank Jasa Jakarta is a commercial bank in Indonesia with over 40 years of history, and they've earned a good reputation for being a trusted brand," said Loong.

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WeLab's experience in running a digital bank in Hong Kong will be an advantage in its Indonesia digital bank gambit. With digital banking in Indonesia still nascent, with few players including Singapore's DBS's Digibank and UOB's TMRW bank, Loong believes that WeLab is uniquely positioned.

"We have a 2 to 3-year head start on building and running a digital bank, a lot of companies are still talking about building a bank, we already have most of the products ready," said Loong.

Besides deposits, lending and payments, WeLab's Hong Kong digital bank is also looking to launch wealth products next year. These products, according to Loong, will be available to the Indonesian digital bank in a short period of time.

It is the expertise in lending, which is the bread and butter of any bank, that WeLab thinks it can succeed in a market like Indonesia. Coupled with wealth products, is how Loong sees WeLab's digital bank breaking even.

The marriage between the deep know-how of operating banking assets and the agile nature of tech companies is how WeLab sees its digital bank succeeding.

"In order to run a successful digital bank you need both kinds of brains, the left and right of it to work," said Loong.

WeLab has already purchased a 24 per cent stake in BJJ, with the remaining stake for majority control to be purchased after regulatory approval, including okays from OJK.

"We look forward to building on this foundation with our fintech expertise, and success of operating a licensed digital bank in Hong Kong, to build a tech-driven digital bank that will be financially inclusive for the people of Indonesia." said Loong.

Read more:

• Top Indonesia bank bolsters digital arm to fend off tech giants
• Indonesia revamps banking rules to spur digital transformations
• Asean's new digital banks will be valued like traditional banks, not pure Internet plays: report