[Updated at 3:24 p.m. on Sep 19, 2022, to add details about Indonesia's digital banking industry]
Jakarta. Astra International, Indonesia's largest car distributor, has acquired the majority shares in local lender Bank Jasa Jakarta, or BJJ, for $258 million, paving the way for a new digital bank in Indonesia, the company said in a statement on Monday.
Sedaya Multi Investama (SMI), Astra's financial arm, completed the acquisition of 49.56 percent of BJJ's enlarged capital for Rp 3.87 trillion ($258 million) on Sep 16. At the same time, WeLab Sky, a subsidiary of Hongkong-based fintech company, acquired the exact amount of shares in the lender.
That wrapped a long process starting three months ago, Gita Tiffanie Boer, Astra International's corporate secretary, said in the statement. On July 1, 2022, SMI and Bank Jasa Jakarta signed a share subscription agreement. The companies completed the preliminary requirements stated in the agreement on Sep 16, including the approval of the Financial Services Authority (OJK), she said.
"The investment in BJJ is in line with Astra's aspirations in the financial services pillar to become the leading retail financial service provider in Indonesia and support the development of the financial services industry and Indonesia's economic growth," Djony Bunarto Tjondro, Astra International's president director, said.
Suparno Djasmin, Astra International's director and director-in-charge for Astra's financial subsidiaries, said the company set its eyes on serving most of Indonesia's 273 million population currently unbanked or underbanked. According to OJK, unbanked refers to an individual who does not have a bank account. The phrase "underbanked" describes those who have a bank account but uses alternative services, like loans shark, to fulfill their financial needs.
"BJJ as a digital bank, through an omnichannel strategy, will complement Astra customers' financial products and services. Research results show that around 77 percent of people in Indonesia are still classified as unbanked and underbanked, Suparno said.
"Through this collaboration, we hope that BJJ can meet customer needs and accelerate financial inclusion and literacy in Indonesia," he said.
Simon Loong, WeLab's founder and group chief executive officer, was enthusiastic about the BJJ acquisition, describing it as one of the strategic moves in Indonesia. He hoped collaborating with Astra International would improve Indonesia's consumer confidence in the company.
BJJ acquisition is the second strategic partnership between Astra International and WeLab. The companies partnered in the financial technology ecosystem in 2018 by establishing a fintech lending joint venture called Astra WeLab Digital Arta.
The digital banking industry is ascending in Indonesia, as established lenders and new players alike looked for a new way to tap into the country's massive unbanked and underbanked market.
The OJK defined a digital bank as a lender that provides its services mainly through electronic channels without a physical office other than the head office. But, established lenders also offer digital banking services through digital channels.
According to a 2021 research by DailySocial, Bank BTPN's Jenius was the most well-known digital bank brand in Indonesia, followed by GoTo Gojek Tokopedia-backed Bank Jago.