LINE Bank opens in Indonesia as Hana Bank’s digital arm

PT Bank KEB Hana Indonesia (Hana Bank) announced on Friday the launch of its digital banking arm, LINE Bank, in collaboration with Japanese technology firm LINE Corporation and its subsidiary, LINE Financial Asia.

LINE Bank went live on Thursday in Indonesia, the brand’s third market in the region after recent launches in Thailand and Taiwan.

“LINE Bank is here to provide convenient and easy-to-use digital banking. We will have various financial products and services tailored to the needs and interests of our customers,” Bank KEB Hana Indonesia president director Park Jong Jin said in a press statement.

Park added that LINE Bank aimed to attract customers from a broad segment. This included members of Generation Z, or people born between 1997 and 2012, who made up the majority of LINE users.

According to Statistics Indonesia, Gen Zers account for the single largest chunk of the population at 28 percent, while millennials, or people born between 1981 and 1996, make up 26 percent.

“Demand for digital transformation in the banking industry is growing rapidly around the globe. With Indonesia’s unique geography, this digital transformation can […] bring about availability, connectivity and simplicity for people to access banking services,” said Kim Young Eun, COO at LINE Financial Asia.

The collaboration with LINE marks Seoul-based Hana Bank’s second foray into Indonesia’s fintech industry. It previously partnered in 2016 with state-owned lender Bank Mandiri to launch LINE Pay, which was quietly discontinued in early 2019.

The Hana Bank-LINE partnership began in 2018, when LINE Financial Asia acquired 20 percent of Hana Bank Indonesia under an equity participation agreement in the first step to creating LINE Bank.

The online-only bank, which obtained its Taiwan operating license in February 2021 as LINE Bank Taiwan Ltd., offers retail banking services including deposits, transfers, debit cards and personal loans.

Indonesia lacks specific rules for these fully digital “neobanks”, although the Financial Services Authority (OJK) is drafting a commercial banking regulation will also cover rules on their establishment. The lack of a legal framework, however, has not kept major banks and technology companies from creating digital banking arms.

“Digital banks are banks that provide services and conduct business activities primarily through electronic channels with limited or no physical offices other than [the corporate] headquarters. The [OJK regulation] for commercial banks is expected to be issued in mid-2021,” OJK spokeswoman Sekar Putih Djarot told The Jakarta Post on Friday.