There are smart and bad “aha” moments, according to Simon Loong. Developing a virtual bank at the height of the pandemic is a smart “aha,” even if it meant a complicated learning procedure for his Hong Kong. Fintech Corporate WeLab, a nearly decade-old online lender.
“We see virtual banking as the long-term monetary matrix,” Loong, co-founder and CEO of WeLab, said in an interview on the sidelines of Forbes’ global CEOs convention in Singapore. WeLab introduced its eponymous banking app in Hong Kong in the summer. With time deposit coverage and virtual wealth advice, the bank weathered the uncertainty of Covid-19 to gather a total of 500,000 users in Hong Kong, adding users for the group’s loans. WeLend Platform.
Founded in 2013, WeLab has raised a total investment of $900 million from Germany’s Allianz, China Construction Bank, International Finance Corporation, Sequoia Capital and Hong Kong billionaire Li Ka-shing’s TOM Group. billion dollars – after raising $220 million in 2017; The company declined to disclose its current assessment.
Today, the nine-year-old fintech plans to export its virtual banking product overseas, starting with Indonesia. “As entrepreneurs, we ask ourselves ‘how do you build it once and sell it two hundred times?’For me, it’s about monetizing the initial investment in WeLab Bank,” said Loong, 45, proudly dressed in an orange and blue pin of his corporate logo. Whether in Hong Kong or the Indonesian capital of Jakarta, he adds that the “fundamental thesis” behind his platform’s virtual banking product remains the same: prepare it for export.
WeLab is the newest foreign company to enter Indonesia, where the bank as a whole remains nascent. British bank Standard Chartered, in collaboration with Indonesian e-commerce company Bukalapak, last month introduced virtual bank BukaTabungan. Line Bank, Japan’s banking service Line chat app, subsidized by Korean giant Naver and Japanese tech giant SoftBank, introduced a virtual banking app in Indonesia in June last year.
As a first step, WeLab acquired Bank Jasa Jakarta (BJJ) of Indonesia along with Hong Kong-based Jardine Matheson’s Astra International in early September. last December and the two formed an Astra WeLab Digital Arta (AWDA) joint venture in 2018. WeLab also introduced Maucash, a virtual loan product, in Indonesia that year.
“The investment in BJJ is in line with Astra’s aspirations [sic] in the pillars of monetary facilities to become the leading providers of retail monetary facilities in Indonesia and help the expansion of the monetary facilities sector as well as the Indonesian economy,” Djony Bunarto Tjondro, Astra’s lead CEO, said in a statement about the acquisition.
A of Bank Jasa Jakarta in Jakarta, Indonesia.
Fostering a currency facilities industry is a daunting task for Southeast Asia’s largest country, which is lagging behind in adopting monetary facilities. Of Indonesia’s 270 million people, at least 77% were unbanked or underbanked in 2018, according to a widely cited World Economic Forum article in January. The Indonesian government aims to achieve 90% monetary inclusion by 2024.
“In a [fully banked] market like Hong Kong, similar to Singapore, you want to focus on a few high-margin products to make a virtual bank profitable. For us, it’s loans and wealth. . . there’s no point in selling that third someone’s bank account,” says Loong. “In Indonesia, our strategy would be financial inclusion. We can offer accounts to other people who have never had one.
The CEO cites the country’s youth as a factor in opening up Indonesia to virtual banking. Two-thirds of the country’s population are adults under the age of 41, according to government statistics this year. in demand for virtual wallets, such as SeaMoney, the e-wallet of billionaire Forrest Li’s Sea Group, and GoPay, GoTo’s payment platform in Indonesia. For Loong, those wallets are just “simple and inexpensive” equipment that are a provisional account resource.
“A virtual wallet, as a product, doesn’t pay interest, can’t lend cash, it’s not a bank, right?” said Loong. The younger generation will move from cash, in the past, to a virtual wallet, to virtual banking, where they can meet their most holistic and comprehensive needs. “
Still, WeLab faces a fierce festival of established local players. Driven by soft regulatory measures, local startups have introduced virtual banks in Indonesia over the past two years. First fully virtual bank last February. Aladdin, subsidized through SoftBank, introduced an app for virtual Sharia banking, or Islamic law-compliant banking, last March.
Loong remains confident that WeLab can keep pace, with plans to launch a virtual banking app next year, the same timeline as Southeast Asia’s super app Grab, which will launch its virtual banking in Malaysia and Indonesia. “Banking, as a whole, is not a win-win industry. . . It can allow several important players to exist,” he says. We are satisfied with the market and believe we are competitive because WeLab Bank in Hong Kong has already developed many products. “
WeLab’s track record of running a virtual bank in Hong Kong, as well as its suite of online loan offerings, would give it an edge over its competitors, Loong said. The market “underestimates the complexity of building a virtual bank,” given the higher expectations of regulators and customers. “You don’t just lend money, trade stocks or provide wealth control advice. You’re a bank, other people give you their savings,” he explains.
Southeast Asia is new territory for Loong, whose career has been split between Hong Kong and mainland China. Prior to co-founding WeLab, Loong spent 15 years in the retail banking divisions of Citibank and Standard Chartered. While pursuing a master’s degree in control at Stanford Graduate School of Business, he met his wife, Frances Kang. Together, the couple would found WeLab together with Kelly Wong, Loong’s classmate since earning a Bachelor of Commerce degree at the University of Sydney in Australia.
The fintech giant’s core business is located in Hong Kong and mainland China, where it operates online customer lending platforms WeLend and WeLab Digital. Last April, it was reported that WeLab was in talks to go public later that year with a valuation of up to $2 billion. In October, a spokesman denied the allegation. The company told Forbes it remains fully committed to building and expanding its virtual banks in Hong Kong and Indonesia while “examining strategic opportunities. “
Indonesia serves as a springboard for Loong’s grand strategy, expanding the company’s success to other territories in the region. WeLab plans to enter Thailand, the Philippines and Vietnam, but did not disclose a timeline for the move. Meanwhile, Loong said the company will continue to operate in Hong Kong and mainland China, while learning classes that can be implemented in Indonesia and in long-term markets.
“Technology, knowledge. . . I know we will be very informed and make a lot of mistakes,” Loong said. “Doing Indonesia is creating an opportunity for us to use ‘how to be smarter next time. ‘So let’s make the same damn mistakes again. “
Correction: October 25, 2022
This article was updated to reflect comments from a spokesperson that WeLab did not intend to make public last April.