Hana, LINE join hands for digital banking in Indonesia

LINE Financial Asia CEO Hwang In-joon, fourth from left, and PT Bank KEB Hana Indonesia CEO Lee Hwa-soo show a signed agreement on a share subscription between the two entities at the group's headquarters in Seoul, Oct. 26. Third from left is Hana Financial Group CEO Kim Jung-tai. Courtesy of KEB Hana Bank

By Lee Kyung-min

PT Bank KEB Hana Indonesia signed a share subscription agreement with LINE Financial Asia in a bid to strengthen Hana's digital banking in Indonesia, the bank said Sunday.

Under the agreement, LINE Financial Asia will have a 20 percent stake in PT Bank KEB Hana Indonesia, becoming the latter's second-largest shareholder.

The partnership between the Indonesian corporate entity of Korea's KEB Hana Bank and the financial subsidiary of global mobile platform operator LINE is expected to foster digital banking, fully capitalizing on the latter's strong brand recognition, user-heavy platform and rich content in the Southeastern Asian country.

Discussions are underway for the two entities to map out age-specific, needs-based business models to maximize customer preferences, following market research conducted by a joint taskforce.

More strategies will be formulated, the bank said, to be tailored for the financial needs of the mobile platform users, a large number of whom are expected to have no major aversions to using a new, advanced way of banking recommended by their long-trusted service provider.

While the bank seeks to boost user convenience via online banking services including deposits, loans and wire transfers, the traditional functions of banks, the financial subsidiary sees the move as a step closer to making a foray into the global market.

A multilateral project will be launched in close cooperation among various domestic and international credit ratings agencies to better assess user credit there, a task the bank says will be achieved confidently based on its decades of experience.

The agreement was signed based on mutual understanding that Indonesia is a financially robust country in the making.

Of the country's over 260 million population living on 18,000 islands, nearly half, or about 100 million people, are reported to use smartphones as of September 2018, the bank said.

Most of the phone users are on social media, mostly using LINE, signaling a great potential for the banking services to penetrate.

“We will provide the IT firm with competent and advanced online financial services,” said Han Jun-seong, deputy president at Hana Financial Group

“Both entities are expected to benefit from shared understanding on the need to promptly pursue digital transformation. We expect the agreement will help the both of us become globally leading entities.”

The digital banking service will be launched within 2018 upon approval from Indonesia's financial authorities.

Hana Financial Group CEO Kim Jung-tai said the partnership laid the ground work for the group to generate around 40 percent in profit by 2025.

“Indonesia, the key country in the New Southern Policy, will serve as the vanguard of KEB Hana's global expansion,” Kim said in a statement.

The new diplomatic policy was announced by President Moon Jae-in in November 2017, in a move to expand the economic influence of Asia's fourth-largest economy in the region.

The joint efforts, defined as the combination of services in the financial and IT sectors, is a major initiative pursued by slew of global financial institutions amid growing demand for tighter integration among various sectors.