Homegrown tech firm Sea Ltd — which is also Southeast Asia’s most valuable company — acquired Indonesia’s PT Bank Kesejahteraan Ekonomi Bank (Bank BKE) for an undisclosed amount last week.
It acquired majority control of the bank, which will help accelerate the company’s expansion of online financial services in Southeast Asia.
The acquisition aligns with Sea’s goal to grow its position as a fintech trailblazer across its region.
Following the recent acquisition, it is reported that Sea is planning to acquire yet another small bank in Indonesia. According to sources close to the matter, Sea is eyeing an Indonesia Stock Exchange (IDX)-listed bank.
The two banks will be merged into a digital bank, which can be used by customers on its e-commerce marketplace subsidiary Shopee.
This allows for a seamless user experience and perhaps, easier access to loans for merchants, the sources added.
Potential Digital Banking War In Indonesia
The potential acquisition comes as Southeast Asia’s biggest tech companies are looking to grab a share of the digital banking sector.
Super app Gojek for one, has acquired nearly a quarter of Indonesia’s Bank Jagoas for about US$160 million as part of a strategic partnership to offer financial services to merchants and drivers in the country.
Backed by Facebook and PayPal, Gojek’s digital wallet GoPay competes with Sea’s e-wallet ShopeePay and Grab’s payment arm Ovo in Indonesia.
The latest survey about Indonesia’s five largest e-wallet companies by Paris-based multinational market research Ipsos Group revealed that 34 per cent of Indonesian e-wallet users made payment via Shopee in October 2020.
In contrast, Ovo’s rate is only at 28 per cent, while GoPay is at 17 per cent.
As Indonesia’s financial market watchdog OJK looks set to issue the country’s first digital banking regulations this year, the battleground is bound to be heated for Sea, Gojek, Grab, as well as traditional banks.
According to OJK, the aim of the planned amendment to commercial bank regulations is to transform banks ahead of the coming “Bank 4.0” era.
Like in other countries, digital banks in Indonesia will offer customers the option of opening accounts, accepting deposits and issuing debt and credit cards. All banking services will be online with no physical branch.
Digital banking will be a game changer in Indonesia as its banking penetration is still low. 52 per cent of Indonesian adults, or 95 million, do not have a bank account, according to the World Bank.
Smartphone penetration in the country, however, has reached 70 to 80 per cent.
In all, digital banking in Indonesia progresses differently from the sector in Singapore.
In Singapore, new fintech players are applying for a license to open a bank while in Indonesia, aspiring digital banks are acquiring local banks who already have licenses.
The idea is to acquire a small and dormant bank and build from there, instead of starting from scratch.
It is currently unclear what kind of products Sea’s digital bank might offer in Indonesia, but it is likely that it will offer loans for sellers in Shopee’s ecosystem.
As the fintech sector matures, digital banking will definitely be the space to watch in Indonesia.
Featured Image Credit: Sea
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