European Neobanks, MS, May 2022
via McKinsey (Asia, 2021) ⭐
Just five years after launch, Tencent-backed WeBank serves some 200 million people, and Alibaba-supported MYbank has more than 20 million SME customers. Over a short period, China’s digital banks now have a roughly 5 percent share of the country’s RMB 5 trillion (~$700 billion) unsecured consumer loan market and more than 7 percent of online SME loans. South Korea’s KakaoBank, launched in 2017, attracted more than 10 million customers in its first year and now has a roughly 5 percent share of the country’s unsecured consumer loan market.
Japan’s Jibun bank, the first Asian digital pure play (launched in 2008), reached profitability less than five years after launch. China’s WeBank and XW Bank and South Korea’s KakaoBank produced positive returns two years after launch. All five Chinese digital banks were profitable in 2019, with WeBank and XW bank posting ROEs of about 28 percent and 30 percent respectively, compared with a national average for all banks of roughly 11 percent.
Russia’s Tinkoff bank is a greenfield stand-alone operation that delivers high profitability (2019 return on equity of 56 percent) and growth (loan book grew by 66 percent in 2019).
via same McKinsey report^
Three months ago, the Philippines announced its maiden set of digital banks. Among the six licensees were state-owned Overseas Filipino Bank and a yet-to-be-operational UNObank.
But all eyes were on the other awardees: digital natives Tonik, Maya, GoTyme, and UnionDigital Bank, the neobanking subsidiary of UnionBank. With the exception of UnionDigital, the group gained attention because they were pretty much fintechs and e-wallets, rather than established banks.
Indonesia’s digital banking sector sees rapid development in 2021 | KrASIA Year in Review
2021 - via Trade.gov
Much of this growth was launched in 2016 when “Jenius” was introduced by BTPN Bank, quickly becoming the most popular digital bank in Indonesia.
Indonesia is currently home to seven digital banks with seven more waiting for licenses from the country’s financial services authority (OJK). The seven currently licensed digital banks include: (1) Jenius (Bank BTPN), (2) Jago (Bank Jago), (3) MotionBanking (MNC Bank), (4) Bank Aladin (BANK), (5) Wokee (Bank KB Bukopin), (6) Digibank (Bank DBS), and (7) TMRW (Bank UOB). The seven banks that are still waiting to get licenses from OJK are: (1) Bank BCA Digital, (2) PT. BRI Agroniaga Tbk, (3) PT. Bank Neo Commerce Tbk, (4) PT. Bank Capital Tbk, (5) PT. Bank Harda Internasional Tbk, (6) PT. Bank QNB Indonesia Tbk, and (7) PT. Bank KEB Hana.
New banking rules in Indonesia allow near-full foreign ownership of local lenders and reduce tape for new services as regulators move to spur growth in the country’s emerging digital banking industry. Foreign companies can now hold as much as 99% in a local lender; the previous cap was 40%. This improvement in market access is expected to smooth the way for digital banks operating in Indonesia that are partially owned by foreign entities, either directly or indirectly. These could include SeaBank (formerly Bank Kesejahteraan Ekonomi, acquired by Singapore’s Sea Group); Bank Jago, now 22% owned by Indonesia’s largest tech company, Gojek, which boasts Google and Tencent among its investors; and Bank Neo Commerce. Indonesian financial technology startup Akulaku, with investors including Alibaba affiliate Ant Group, is moving to become Bank Neo Commerce’s controlling shareholder.