Hong Kong Fintech Startup WeLab Acquires Bank Jasa Jakarta, Ready to Compete in Indonesia's Digital Bank Industry

Startups fintech from Hong Kong WeLab is ready to compete in the Indonesian digital banking industry. WeLab officially acquired PT Bank Jasa Jakarta (BJJ) to establish a digital bank which is expected to operate in the second half of 2022.

Based on official statement, the WeLab consortium through Welab Sky Limited (WeLab Sky) signed a Share Purchase and Subscription Agreement with all BJJ shareholders to become the sole controller.

As a first step, WeLabSky already holds 24% of BJJ's shares, of which the remaining shares to be controlled by the majority will be settled after obtaining approval from the relevant regulators, including the Financial Services Authority (OJK). Meanwhile, J. P Morgan acted as financial advisor to WeLab on this acquisition.

WeLab's move has attracted both new and old investors (Existing) to disburse funds of $240 million or around Rp3,46 trillion--also claiming to be funding fintech largest in Indonesia in 2021--to launch this corporate action.

WeLab Founder & Chief Executive Simon Loong confirmed that BJJ has built an excellent reputation as a trusted retail bank in Indonesia for more than 40 years.

"We can't wait to build this foundation, armed with expertise fintech and our success in operating a licensed digital bank in Hong Kong, to build tech-driven digital bank which will provide inclusive financial services for the people of Indonesia

Meanwhile, BJJ President Director Handrie Wirawan believes WeLab's experience and expertise in the fintech and digital banking can encourage BJJ to improve financial services with technology support.

"We are pleased to welcome WeLab as a new shareholder and bring BJJ into a new era of digital banking. BJJ has gone through digital transformation since 2018, and this strategic initiative is in line with our commitment and vision to offer banking services to many consumers," he explained.

Company profile

WeLab is a startup p2p loans which operates in three countries through seven financial product brands, including WeLend and WeLab Bank in Hong Kong; WeLab Digital, Taoxinji, Gugu Wallet, and Tianmian Tech in China; and Maucash in Indonesia.

A little information, Maucash is a proprietary financial product Astra WeLab Digital which is a joint venture (j) owned by Astra Financial and WeLab which was founded in 2018. Thus, this digital bank will become WeLab's second business portfolio in Indonesia after Maucash.

WeLab Bank has 50 million users and more than $10 billion in loans. Meanwhile, WeLab has 150 users digital banking of Hong Kong.

Meanwhile, Bank Jasa Jakarta is a retail bank that offers savings products, loans, and banking services. BJJ has 11 sub-branches and three cash offices with ATM networks incorporated in the Prima network in all major cities in Indonesia.

Product lending and wealth

Quoting Business times, Loong said he would bring his WeLab Bank experience and expertise in fintech as strong advantages to digital banking. Moreover, the digital banking industry and business model is still relatively new in Indonesia.

A mix of in-depth knowledge of banking asset operations and culture agile technology companies are considered to be their strategy to successfully operate digital banks.

"We have 2-3 years to start building and operating a digital bank. Many companies are still talking about [how to] build a bank, while our products are already ready," he explained.

In addition to deposits, loans and payments, Loong revealed that he will release products wealth which will also be available at Indonesian digital banks. It assesses the presence of the product wealth this will be the entry point for this new digital bank to break even point (BEP).

As is known, a number of startups and banks in Indonesia have already taken similar steps in order to take a market niche among the underserved (underbanked) and unserved (unbanked) by financial products.

Take for example, Gojek with Jago Bank (originally Artos Bank), Akulaku and Bank Neo Commerce (originally Bank Yudha Bhakti), and Sea Group (parent Shopee) with Seabank (originally Bank Kesejahteraan Ekonomi).

Meanwhile, foreign banks operating in Indonesia and having a similar position to WeLab include Bank DBS (Singapore) through Digibank and UOB (Singapore) through the TMRW product.

Based on research by Google, Temasek, and Bain & Company in 2019, the number of people underbanked in Indonesia reached 47 million, while 92 million of them are unbanked.