Sea Limited could venture into insurance technology and wealth management as it plans to bolster its financial services business, the group’s chief corporate officer Yanjun Wang said on Tuesday. She was speaking during an earnings call after announcing the NYSE-listed company’s first quarter 2021 performance.
In response to a question about the company’s digital finance strategy such as expanding its buy now pay later service, Wang said Sea Money — the company’s financial services unit — will gradually roll out its programmes to more users across more markets
“I think this is a programme that facilitates wallet usage, as well as growth of our e-commerce platform… on top of which we can build other additional financial services, such as insurtech and wealth management technology services,” she said.
Sea’s buy now pay later programme, which allows customers to purchase a product first and defer payment, is called SPayLater and is available in Indonesia and Thailand. Other financing services Sea Money offers include SPinjam, which lets users in Indonesia avail loans, and SPinjam Untuk Penjual, which offers micro-loans to small business owners in Indonesia.
Strong mobile wallet growth in Q1
Sea’s confidence in its digital financing plans comes as its mobile wallet’s total payment value tripled year-on-year to $3.4 billion in the first quarter, even though SeaMoney logged an operating loss of $157 million.
Sea Money accounted for $51 million in revenue in the March quarter, a mere 3% of the group’s total revenue of $1.76 billion in the period.
The Singapore-based group is heavily investing in its fintech arm. In February this year, it acquired Indonesian lender Bank Kesejahteraan Ekonomi (Bank BKE) with the aim of turning it into a digital bank. It also won a digital bank licence in Singapore last December.
Its aggressiveness seems to be paying off. Sea’s digital wallet ShopeePay launched in Indonesia only in 2019, three years after the local decacorn GoJek launched GoPay. But according to a survey conducted by market research firm Snapcart in March, it was the most used e-wallet in Indonesia, with GoPay in second place.
This bodes well for Sea’s fintech ambitions, alongside the fact that 45% of Southeast Asia’s adult population is unbanked or underbanked, said Sachin Mittal, a DBS Bank analyst who covers Sea. “[45%] is where China was five to six years ago. Today, it’s around 10-15%. There is huge potential for them to grow,” he said. “E-wallet is not a big revenue driver [but] its all about using the data to go into [other services].”
Add to that the $6 billion Sea has in cash and cash equivalent, according to its financial statement, and it has the engine to fend off regional rivals like the newly-merged GoTo and Grab in the fintech space.
Overall, Mittal said he is optimistic about Sea’s growth. “It seems they are not slowing down,” he said. Sea’s Q1 2021 revenue grew by nearly 150% year-on-year.
As for whether the group felt disadvantaged by the lack of a ride-hailing business, unlike its rivals GoTo and Grab, Wang dismissed such claims. “We think that we are very fortunate to have three of the largest consumer internet opportunities in the high-growth region that we are in, and we’re able to manage it across so many complex and different markets.”
Sea was coy about its plans for the Latin American region, despite it launching e-commerce platform Shopee in Mexico and Brazil. Wang only said that the company is still in the “very early stage[s] of operating the region.