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Banking and finance

Naver's Line Bank expands in Asia with Indonesian venture

In contrast to Kakao's rising profile in Korea's financial scene, Naver is leading digital banking in other Asian markets

By Jun 13, 2021 (Gmt+09:00)

Naver's Line Bank in Indonesia will operate in partnership with Korea's Hana Financial Group.
Naver's Line Bank in Indonesia will operate in partnership with Korea's Hana Financial Group.

Naver Corp.’s Japan-based messaging app affiliate Line Corp. is rapidly expanding its digital banking business in Asian countries outside Korea.

On June 11 Line launched a digital banking platform in Indonesia in partnership with South Korea’s banking giant Hana Financial Group. The digital bank will operate under the name of Line Bank by Hana Bank.

Hana Bank, the banking unit of Hana Financial Group, said that the Indonesian venture is the first time a major Korean bank has set up an overseas digital bank together with a large tech company.

The new digital banking service in Indonesia is the chat app company’s third internet-only bank in Asia, after Line BK in Thailand and Line Bank in Taiwan.

Despite Naver CEO Han Seong-sook’s comment in 2019 that Naver has no intention to run a digital bank within Korea, the company has been rapidly strengthening its presence in the banking sector in other parts of Asia. Naver will also establish Line Bank in Japan next year.

With Naver’s absence, Korea’s domestic internet-only bank sector currently has two players, KT Corp.’s K Bank and Kakao Corp.’s Kakao Bank. Toss Bank will also join the race in September. 

Kakao Bank has become Korea's top digital bank, while Naver's Line is heading overseas. 
Kakao Bank has become Korea's top digital bank, while Naver's Line is heading overseas. 

LINE’S STRENGTH AS A PLATFORM

Line is the market leader among all messaging apps in Japan and Southeast Asia. It boasts 169 million monthly active users (MAU) in Indonesia, Japan, Taiwan and Thailand, according to the company’s March data. Its global MAU stood at 189 million.

Line Bank’s performance in Taiwan, where it was launched in April, has also been strong thanks to Line’s position as the top messenger app there. Line Bank Taiwan, in its first week of operation, surpassed the country’s first digital bank Rakuten International Commercial Bank in the number of customers.

Industry analysts say that Line’s brand power as the leading app is a key advantage versus the traditional banking sector in Indonesia.

“Like Korea’s Kakao Bank, which was able to grow so quickly building on the KakaoTalk messenger app user base, Line Bank can differentiate its banking service from local banks by utilizing Line’s wide user base,” said a Korean financial industry official.

Line's strong brand awareness has allowed the company to launch a variety of financial services in Asia. Line currently operates stock trading, insurance as well as credit loan services in Japan. The company also runs a cryptocurrency exchange in Singapore called Bitbox.

LINE BANK BY HANA BANK IN INDONESIA

Indonesia is the world’s fourth-largest country by population with more than 260 million people.

But only around 40% of the Indonesian citizens have bank accounts. As the country is made up of more than 18,000 islands, Indonesia’s banks often fail to reach residents in more remote areas. Analysts say that’s why fintech and digital financial services have recently been skyrocketing in the country.

Line Bank by Hana Bank will offer contactless account opening services online, not yet offered by the traditional banking sector in Indonesia. In addition, using the Line messenger app, the customers of the new bank can receive notifications for money transfers, use card-less cash withdrawal services and pay utility bills.

The bank will also launch its credit loan service by the end of 2021.

“The customers in Indonesia will be able to apply and can get their loans approved in less than three minutes, just like the service we are operating here in Korea,” said a Hana Bank representative.

Write to Nan-sae Bin at binthere@hankyung.com

Daniel Cho edited this article.

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