Why LINE Bank chose Indonesia as its third home
After successful launches in Thailand and Taiwan, LINE is going steady in Indonesia.
Indonesia did not approach digital banking with the same fanfare its Southeast Asia peers did: there were no new digital bank licenses created and no dramatic selection and culling from a pool of competitive bids. Instead, Indonesia released digital banking guidelines in mid-2021 that allowed digital banks to be built from scratch, through partnerships and acquisitions, or through reorganising current players into neobanks.
Amongst the newest players who eagerly entered the market is LINE Bank by KEB Bank. The bank was borne out of a collaboration between LINE Financial Asia–an affiliate of Japan and South Korea co-owned company LINE Corporation–and PT Bank KEB Hana Indonesia, a subsidiary of South Korea’s Hana Bank. LINE Bank had acquired a 20% stake in KEB Hana Bank Indonesia in 2018.
In just a year, the neobank has already set a solid foundation for its Indonesia operations, with 350,000 customers as of March 2022 across the 19,000 islands that make up the country, Jihyun Kim, lead of LINE Bank Indonesia biz team at LINE Financial Plus, told Asian Banking & Finance.
“LINE’s advanced digital technology and KEB Hana Bank’s retail banking experience will prove to be the future of the banking industry, demonstrating a new financial model that begins in Indonesia,” Kim said.
Indonesia is the third market that LINE Bank operates in. The digital bank is already active in Thailand, where it has 3.4 million users as of October 2021; and in Taiwan, where it recently celebrated its one-year anniversary and boasts of a 1.4 million customer base. Plans are already underway to make its entrance in Japan.
Asian Banking & Finance spoke with Kim to learn more about their venture in Indonesia and LINE Bank’s outlook for the future of mobile banking in the country.
Why did LINE Bank choose to launch its services in Indonesia?
LINE Bank by Hana Bank targets the Indonesian financial market by providing convenient digital banking services that combine the tech expertise of Asia's leading mobile platform company LINE with the accumulated financial know-how of Hana Bank.
In Indonesia specifically, due to the market’s unique geographical characteristics, we believe bringing banking services to people’s mobile phones will greatly increase availability and convenience for users.
Tell us more about the partnership with KEB Hana Bank.
LINE’s advanced digital technology and KEB Hana Bank’s retail banking experience will prove to be the future of the banking industry, demonstrating a new financial model that begins in Indonesia.
What pain points amongst Indonesia’s banking customers will LINE Bank Indonesia aim to address?
Indonesia is a vast nation with more than 18,000 islands, many of which do not provide banking services. For this reason, it is difficult for Indonesians to use banking services, and the burden of service fees also acts as a barrier to entry for new entrants. In addition, people need to visit a branch to get a loan service.
LINE Bank by Hana Bank provides fast and convenient account opening through mobile phone. Also, it offers no-fee transfers and withdrawals, time deposits, and cardless cash withdrawals. LINE Bank by Hana Bank aims to solve this pain point through launching the mobile loan service (people can complete the application, verification, and disbursal within minutes without having to go to the bank or submitting documents).
What would you say is LINE Bank Indonesia’s “charm point”?
We have the LINE ecosystem that is supported by a strong LINE community. This new LINE Bank by Hana Bank presence will definitely strengthen our ecosystem and offer seamless services to our users. That is the uniqueness that we believe is not offered by other digital banks.
What products and services do you currently offer?
We offer the following services: saving accounts, [and] with eKYC (electronic Know Your Customer), customers can easily open savings accounts without having to go to a bank branch. Each account offers no-fee transfers and withdrawals, and no monthly admin fee. Customers can receive automatic deposit/withdrawal notifications through LINE messenger. In addition, cardless cash withdrawal from Hana Bank’s ATMs is also available.
LINE Bank [also] offers time deposits starting from as little as 1 million rupiah (about US$70), in addition to checking their returns in real-time. Through various promotions, customers can also receive special cashback rewards. Customers can [also] pay their phone, internet, and electricity bills using the LINE Bank app.
Could you share with us a sneak peek of what services you plan to offer in the future? What can customers look forward to?
In March 2022, LINE Bank by Hana Bank launched lending services to customers with existing receiving accounts and plans to expand the lending services to all customers in the second half of this year.
Following LINE Bank in Thailand and Taiwan, LINE Bank in Indonesia plans to expand its business by focusing on lending services through upgrading its financial business.
What is your outlook for digital banks in Indonesia?
The demand for digital transformation in the banking industry is growing rapidly all around the world. In Indonesia specifically, due to this market’s unique geographical characteristics, we believe bringing banking services to people’s mobile phones will greatly increase their availability and convenience.
In your opinion, what does the future of Indonesia’s banking system look like?
We have seen disruption in every part of our lives—in how we live and work—including how we pay for items, save, transfer money and get loans. LINE is determined to continue developing our digital financial services for customers in Indonesia by creating a smart financial ecosystem that everyone can carry with them.
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