OJK (Indonesia’s Financial Services Authority) has announced that Sea Group’s e-commerce arm Shopee has acquired local lender Bank Kesejahteraan Ekonomi (Bank BKE) with the aim of transforming it into a digital bank, reported Reuters.
Headquartered in Singapore, Sea Group is a NYSE-listed Southeast Asian technology group with e-commerce, games and digital payments businesses, and a market cap of USD 136.5 billion.
The group is said to be in the middle of a significant fintech push throughout the fast-growing South-east Asia region, having just been awarded a full digital bank licence from MAS (Monetary Authority of Singapore). Sea Group is expected to commence digital banking operations in Singapore from early 2022.
Indonesia is therefore the second regional market where Sea Group to looking to set up digital banking operations. The country is said to be a market ripe for digital banking due to its largely unbanked population and high mobile penetration rate. While half of its 270 million population do not have bank accounts, most of them have mobile phones.
Amid the Covid-19 pandemic, local banks have recently reported a surge in the usages of their digital services and an increase in the registration of digital banking accounts.
Shopee has yet to make an official application with the regulators to transform Bank BKE into a digital institution but is “currently preparing the infrastructure to do so”, according to OJK official Anung Herlianto.
He also told reporters that the OJK was preparing regulations for new digital banks which will likely be released in mid-2021.
Bank BKE will likely expected to prepare IDR 3 trillion (USD 213.64 million) in capital, he added.
Shopee’s biggest digital bank rival in Indonesia is likely to be Bank Jago, in which Indonesian payments and ride-hailing group Gojek owns a 22 percent stake. Jago provides access to digital banking services through Gojek’s platform and is set to become the first fully digital bank in Indonesia.
According to a Straits Times report, Sea Group said its acquisition of Bank BKE would enable it to serve customers on its e-commerce marketplace subsidiary Shopee, allowing for a seamless experience.
Sea Group is said to also be planning to buy another small publicly listed bank, which it plans to merge into Bank BKE.