SeaBank Indonesia achieves rapid profitability and growth

SeaBank Indonesia appears to be rewriting the rules of digital banking with a relentless focus on retail banking, achieving remarkable growth and profitability in record time.

In an exclusive interview, Junedy Liu, vice president director, and Lindawati Octaviani, director of finance, shared insights into the bank’s strategic direction and impressive financial milestones.

Unwavering focus and technological innovation

Like most new digital banks in the country, SeaBank Indonesia's transformation under Sea Limited’s management has been strategically astute with the intention of digitally transforming PT Bank Kesejahteraan Ekonomi (Bank BKE), using technology to serve the underserved. "Before Sea’s acquisition of Bank BKE, we were primarily serving small businesses and pensioners. Now, we have expanded our service to include the broader retail market, reaching the wider, unbanked population," said Liu.

This strategic shift has enabled SeaBank to tap into a vast, underserved market, addressing Indonesia’s financial inclusion gap where only about 50% of the population has bank accounts, and just 5% can secure loans from traditional banks.

SeaBank's use of technology to drive financial access has been a key factor in its rapid growth. Octaviani explained: "Our mobile-first strategy ensures our app is user-friendly, even on low-cost smartphones. Daily interest is credited to accounts with no minimum balance, incentivising customers to save. We don’t impose any admin fees and offer a generous quota for free interbank transfer and e-wallet top-up." This approach has attracted millions of new customers, many of whom are engaging with banking services for the first time.

A robust technological infrastructure underpins SeaBank's operations. The bank uses artificial intelligence (AI) and machine learning for credit scoring and fraud detection, ensuring efficient and secure service delivery.

Strategic partnerships and customer-centric products

The bank’s collaboration with Sea’s e-commerce platform, Shopee, has also been pivotal. Liu elaborated: "By promoting SeaBank's services during Shopee’s peak times, we've managed to scale our user base significantly. We now have 13 million users and aim to reach 15 million by year-end." This collaboration has enabled SeaBank to gain new customers and provide innovative products that support financial flexibility while practising responsible spending.

Rapid profitability

What sets the bank apart is its ability to achieve profitability in just 18 months after rebranding from Bank BKE to SeaBank Indonesia in 2021, a feat almost unimaginable in the green field digital banking industry. SeaBank’s assets have grown to $1.9 billion (IDR 31.2 trillion) with a profit of $12.5 million (IDR 203.8 billion) as of 30 June 2024, making it one of the largest players in the digital banking space in Indonesia.

Challenges and future prospects

Despite its early successes, SeaBank and most of its new digital banking peers face several challenges, including infrastructural issues such as a connected and integrated national identity and data-sharing and portability platform, like Aadhar in India. "While aligning national identities with tax numbers is a step forward, more work is needed to digitalise and connect the essential services like a property title deed registry and business licensing," Liu pointed out. SeaBank addresses these challenges through continuous innovation and collaboration with regulatory bodies.

Looking ahead, SeaBank plans to expand its product offerings to reach wider audiences. "We are exploring opportunities and aim to introduce more sophisticated banking products as our customers' financial needs evolve," said Liu. By leveraging big data and machine learning, SeaBank is poised to offer highly personalised financial services.

SeaBank Indonesia’s rapid growth and profitability are a testament to its single-minded focus on retail banking and strategic use of technology. By addressing the needs of the underserved and leveraging Sea’s vast ecosystem, SeaBank has set a new benchmark in the banking industry. As it continues to innovate and expand, SeaBank is poised to play a pivotal role in shaping the future of banking in Indonesia. It is a compelling example of how targeted strategy, innovation, and a quiet approach can drive remarkable success in a short period.

Meet Junedy Liu, Lindawati Octaviani, Altona Widjaja, Edisono Limin, and Indra Utoyo, along with decision-makers and practitioners, at Finance Indonesia on 12 September 2024.
Click here: https://theasianbanker.com/finance-indonesia-2024/