WeLab, a fintech unicorn startup based in Hong Kong, is planning to launch a digital bank in Indonesia in the second half of this year, following its $240 million deal to buy a controlling stake in Bank Jasa Jakarta.

However, Indonesia’s digital banking market will be tough to crack, as traditional banks and tech companies have rushed into the growing market. Jenius by Indonesian bank BTPN was the first, launching in 2016. The likes of Blu by Bank Central Asia and Bank Jago, backed by GoTo, followed.

Simon Loong, co-founder and CEO of WeLab, believes the Indonesian digital banking market has room to grow and the fierce competition is good for the market. “Indonesia is a large market,” Loong says in a video interview from the startup’s office in Hong Kong. “It’s not a winner-takes-all market. And in terms of digital banking, it’s still in its early stage, so there is no developed and clear winner.”

According to Loong, WeLab prefers to enter a new market where there are multiple players already in operation. Despite the tougher competition, it makes educating the consumers easier and more efficient as many players are doing the same thing.

In 2020, WeLab launched its first digital bank in Hong Kong, WeLab Bank, that currently has around 150,000 customers. The bank’s most popular product is the GoSave time deposit, where interest will be higher if more customers joined the batch of deposit. The company will offers similar products for the upcoming digital bank in Indonesia.

WeLab already has a presence Indonesia. In 2018, it formed a joint venture with automobile distributor Astra International to operate Maucash, an online lending app, which currently has more than three million users. WeLab’s shareholders also have a presence in Indonesia. Allianz, for example, has more than 650,000 customers as of last year.

“So in the future, Indonesia will have the same structure as in Hong Kong, where we will have a lending platform and a digital bank. We will operate in conjunction with each other and there will be a lot of synergies,” Loong says.

Digital banking in Indonesia is on the rise, according to a recent report by consulting firm McKinsey. About 78% of Indonesian customers in its survey last year is an active user of a digital bank, up from 57% in 2017. The pandemic, with its social restrictions, has spurred the growth of digital banking, as 80% of the survey respondents aim to maintain or increase their use of mobile or internet banking beyond the pandemic.

“In the next couple years, we will focus on building the pan-Asian digital bank—the first in Hong Kong, now Indonesia. We continue to look for other markets. I think there are few markets that we found interesting,” Loong says, naming Thailand and Vietnam as examples.

WeLab is also eyeing to go public later this year after it completes the acquisition and consolidation, a move that was also postponed in the wake of market volatility. “When we will go to investors for public or private funding, people now already have more confidence because of a proven track record,” says Loong.