Native tech company Sea Ltd, which is also Southeast Asia's Most Valuable Company, acquired Indonesian PT Bank Kesejahteraan Ekonomi Bank (Bank BKE) last week for an undisclosed amount.
It acquired majority control of the bank, which will help accelerate the company's expansion into online financial services in Southeast Asia.
The acquisition is in line with Sea's goal of expanding its position as a fintech pioneer in its region.
Last month, Sea raised $ 2.57 billion in a stock offering intended for expansion efforts. The company also received a digital banking license in Singapore last month.
Following the recent acquisition, Sea is set to acquire another small bank in Indonesia. According to relevant sources, Sea has an eye on a bank listed on the Indonesia Stock Exchange (IDX).
The two banks will be merged into one digital bank that can be used by customers on their e-commerce marketplace subsidiary Shopee.
This allows for a seamless user experience and potentially easier access to credit for traders, the sources add.
Possible digital banking war in Indonesia
The potential acquisition comes from Southeast Asia's largest tech companies seeking a share in the digital banking sector.
On the one hand, the super app Gojek has acquired almost a quarter of the Indonesian bank Jagoas for around 160 million US dollars as part of a strategic partnership to offer financial services to dealers and drivers in the country.
With the support of Facebook and PayPal, Gojek's GoPay digital wallet competes with Sea & # 39; s e-wallet ShopeePay and Grab & # 39; s payment arm Ovo in Indonesia.
The latest survey by the Paris-based multinational market research Ipsos Group of Indonesia's five largest e-wallet companies found that 34 percent of Indonesian e-wallet users made payments through Shopee in October 2020.
In contrast, Ovo's rate is only 28 percent, while GoPay is 17 percent.
With Indonesian financial market watchdog OJK expected to enact the country's first digital banking regulations this year, the battlefield is bound to be hot for Sea, Gojek, Grab and traditional banks alike.
According to the OJK, the aim of the planned change in commercial banking regulations is to reorganize banks before the coming “Bank 4.0” era.
As in other countries, digital banks in Indonesia offer customers the ability to open accounts, accept deposits, and issue debts and credit cards. All banking services will be online without a physical branch.
Digital banking will play a crucial role in Indonesia as its bank penetration is still low. According to the World Bank, 52 percent of Indonesian adults or 95 million do not have a bank account.
However, smartphone penetration in the country has reached 70 to 80 percent.
Overall, digital banking in Indonesia is developing differently than the sector in Singapore.
In Singapore, new fintech companies are applying for a license to open a bank, while in Indonesia emerging digital banks are acquiring local banks that already have licenses.
The idea is to purchase a small and dormant bank and build from there instead of starting from scratch.
It is currently unclear what type of products Sea's digital bank could offer in Indonesia, but it is likely that it will offer loans to sellers in the Shopee ecosystem.
As the fintech sector matures, digital banking will definitely be the place to watch in Indonesia.
Selected image source: sea