Monday, 15 July 2024

LINE and Hana Bank launch digital-only bank in Indonesia

5 min read

By Dandreb Salangsang

The strategic partnership between LINE and Hana Bank continues following the launch of digital banking platform LINE Bank in Indonesia. Following the start of operations early this month, Indonesia became LINE Bank’s third market after it launched in Thailand and Taiwan.

  • LINE Bank enters the competitive Indonesian market
  • Momentum Works report showed that digital banking app downloads grew by 7%
  • LINE acquired a 20% stake in Hana Bank Indonesia

Asia's leading mobile platform company LINE and Hana Bank launched LINE Bank in Indonesia to offer convenient digital banking services.

LINE Bank enters the competitive Indonesian market

LINE Bank will compete in a market of digital banks such as Gojek’s Bank Jago, Sea Group’s  Seabank Indonesia, Akulaku’s Bank Neo Commerce, and Kredivo. Customers can open savings accounts without having to go to the bank. Each account offers no-fee transfers and withdrawals and no monthly admin fee. Customers can receive automatic deposit/withdrawal notifications through the LINE messenger. Cardless cash withdrawals from Hana Bank’s ATMs are available. It offers time deposits starting from as low as IDR 1 million (about $70), in addition to checking their returns in real-time. LINE Bank offers customers debit cards. Customers can receive special cashback rewards through various promotions. Customers can pay their phone, internet and electricity bills using the LINE Bank app.

Gojek bought a 22% stake in Bank Jago, a move that will allow its users to access digital banking services through the ride-hailing operating platform. Bank Welfare Ekonomi (Bank BKE) was changed to PT Bank Seabank Indonesia (SeaBank). The bank was acquired by Shopee’s parent company, Sea Group this year. Akulaku became the main investor of Bank Neo Commerce in its move to enter the financing service ecosystem. Founded in 2016, Kredivo provides services that include buy now, pay later (BNPL) schemes, e-commerce and offline purchases, and personal loans.

Digital banking app downloads grew by 7%

A recent report of business development company Momentum Works showed that digital banking app downloads increased by 7% last year in Indonesia. Leading apps come from established banks like BTPN’s Jenius, OCBC’s Nyala, and Permata Bank’s PermataMe. Many Indonesian digital bank users tend to download multiple mobile banking apps and explore. It added that a dominant player has not yet emerged.

Young Eun Kim, chief operating officer at LINE Financial Asia, said, “The demand for digital transformation in the banking industry is growing rapidly around the world. In Indonesia, due to the market’s unique geographical characteristics, we believe that bringing banking services to people’s mobile phones will greatly increase their availability and convenience”.

LINE acquired 20% stake in Hana Bank Indonesia

LINE, the Japan-based subsidiary of Softbank group and Naver, formed a strategic partnership  with Hana Bank in October 2018. LINE acquired 20% of Hana Bank through a share subscription agreement. It made LINE the bank’s second-largest shareholder. Hana Bank invested $10.4 million  and leveraged the digital capabilities of LINE.

Bayu Wisnu, compliance director at Hana Bank, claimed the digital bank will focus on consumer financing in the country.  It is now open for pre-registration and will introduce financial products and fintech services such as deposit and savings accounts, microcredit products, and remittance and bill payment services. The fintech services are tailored to each locality’s specific needs and interests.

All the account users will automatically become customers of Hana Bank. It has rolled out its official accounts on LINE and Instagram for brand promotion in the country.

LINE Bank’s convenient digital banking services were designed through the combined tech expertise of LINE and the financial knowledge of Hana Bank.

Expansion in LINE’s fintech business

As part of its expansion in Southeast Asia, LINE Bank also rolled out its services in Thailand and Taiwan. LINE Bank in Thailand was formed through a partnership between Kasikornbank and LINE.

Since its launch in October 2020, the digital bank has attracted two million users as of February. Around 50,000 new savings accounts were opened in a single day and about $700 million worth of financial transactions were made on the platform.

The digital bank has issued personal loans amounting to over $165 million and received more than 40,000 loan applications on a single day.

The digital bank opened its business in Taiwan after obtaining licence from the Financial Supervisory Commission (FSC). It targets Taiwan’s banking market and will expand its services into LINE ecosystem with a wide array of conventional financial services such as deposits, loans and insurance.

Since 2012, LINE messaging app has attracted 21 million users which accounted for 90% of the total population in the country. In 2016, LINE rendered digital banking services to Taiwanese consumers with LINE Pay, a built-in service in the messaging app that enables them to make transactions. LINE Pay has 8.4 million users, achieving 28.1% market penetration. To boost its presence in the country, LINE Bank partnered with Taipei Fubon Bank, which holds a 25.1% stake in the company. CTBC Bank, Union Bank of Taiwan, Standard Chartered Bank, Taiwan Mobile, and FasEastone each had a 5% stake.

As more consumers lean towards online platforms, digital-only banks must provide strong countermeasures to address cybersecurity risks and fraud as part of their customer-centric scalable solutions.

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