Hong Kong-headquartered WeLab Holdings Ltd. plans to further expand into Southeast Asian markets with large, tech-savvy populations as it seeks to become a pan-Asia digital bank following its proposed acquisition of PT Bank Jasa Jakarta in Indonesia.
The Sequoia Capital Operations LLC-backed financial technology company on Dec. 6 announced plans to acquire Bank Jasa Jakarta and to launch its second digital bank in Indonesia in the latter half of 2022. The company owns WeLab Bank Ltd., one of eight operating virtual banks in Hong Kong. It has already raised $240 million from existing and new investors to fund the deal in Indonesia.
"We don't have to [expand] in all markets, we should do it in strategic markets that we like," WeLab Founder and Group CEO Simon Loong told S&P Global Market Intelligence in an interview. The company is interested in Thailand, the Philippines and Vietnam, he said.
Conversely, Singapore, which granted four digital bank licenses in late 2020, is not an attractive market for the company.
"We looked at the Singapore opportunity as well and decided to give it a pass because of the size of the population, and it's pretty overbanked," Loong said.
Economies of scale
Loong expects Hong Kong's WeLab Bank to be profitable in two to three years and the planned Indonesia digital bank to achieve breakeven in three to five years.
"The real opportunity is once you build the first bank properly, you can build the second bank much more efficiently with economies of scale," Loong said.
WeLab Bank took about 18 months to progress from licensing to launch, the executive said, adding that the second bank in Indonesia may take six to nine months to achieve this, while the third will likely be more efficient. In Hong Kong, WeLab and its member company, Welend Ltd, have already amassed about 500,000 customers. The firm has also partnered with Allianz Global Investors to develop digital products for wealth management, focusing on goal-based investments, and will launch the service in the first half of 2022.
In Hong Kong, Loong dubbed the current operating period as an "investment phase" in which to enhance its technology, acquire customers, build its brand and educate customers, as virtual banking is a new concept. It is looking to emulate the synergy of lending and digital banking in Indonesia. Since 2018, the fintech has operated a licensed online lending app, Maucash, with PT Astra International Tbk, serving more than 3 million Indonesian users, according to the company.
Regional ambitions
In the long run, WeLab is seeking to become a pan-Asia bank despite competition from players such as GoTo Group, the merged company of ride-hailing business Gojek and major e-commerce platform Tokopedia. However, WeLab has a competitive edge, as fintechs with the know-how to work in digital banking tend to be locally focused, while firms with a regional presence such as Grab Holdings Ltd. and Gojek are ride-hailing businesses first and foremost rather than fintechs, he said.
"Ride-hailing and banking [are] like two different worlds apart," Loong said. "We like being a more regional player and we're already there [in know-how], and we have the opportunity to make a difference."
