Editor’s note: This story has been updated to reflect the fact that the Line Bank by Hana Bank service has not been launched yet.
Messaging service giant Line Corporation has rolled out a digital banking platform in Indonesia through a partnership with local lender Bank KEB Hana Indonesia, a subsidiary of South Korea’s Hana Bank.
The platform, which is currently in pre-registration period and is set to be officially launched before the second half of this year, is the much-anticipated result of a 2018 deal between the two companies. The transaction, saw Line, through its subsidiary LINE Financial Asia, acquire a 20% stake in Bank KEB Hana Indonesia to expand digital banking services in Southeast Asia’s largest economy.
The digital banking service, called Line Bank by Hana Bank, offers three products: savings, debit card and time deposit. Line Bank says, on its website, the platform can be used to manage various banking activities such as opening savings and deposit accounts without coming to branches, applying for debit cards, making transfers to other banks, purchasing pulses and electricity, cash withdrawals without cards.
Indonesia is not the first market tapped by Line for its digital banking play. The Japan-headquartered firm has also introduced similar services in Thailand and Taiwan. In Thailand, the company in 2019 signed a JV with Kasikorn Bank to set up Kasikorn Line, which in October last year launched its digital banking platform Line BK.
In Taiwan, meanwhile, Line’s local subsidiary, Line Bank Taiwan, was granted a banking license in February by the country’s Financial Supervisory Commission (FSC). Just two months later, the company, whose banking services are integrated into its messaging app, drew a rebuke from the regulator after its system crashed.
Indonesia has recently seen a proliferation of digital banking services largely driven by tech startups who are looking to deepen their financial services footprint.
Among major deals in the space, Ant Group-backed fintech Akulaku acquired a 25% stake in Bank Yudha Bhakti (now Bank Neo Commerce Tbk) in September 2020. Sea Group acquired small lender Bank Kesejahteraan Ekonomi. Ride-hailing giant Gojek secured a 22.16% stake in Bank Jago (formerly Bank Artos) in December 2020.
While on one hand, tech companies such as Grab, Traveloka, and ALAMI are said to be in the race to invest in small-asset banks to collaborate on digital banking, established banks are also making strategic investments in digital companies to tap on to their users.
Development in the nascent industry is moving at a rapid pace, which has been enabled by minimal regulatory intervention in the space, as of now.
Speaking to The Straits Times in February, Indonesia’s Financial Services Authority (OJK) said it plans to outline guidelines by the middle of this year on how digital banks should operate in the country.