Giant Moves Closer, Allo Bank Becomes a Serious Player for Indonesian Digital Bank

            Several leading technology companies in Southeast Asia have announced that they will invest in Indonesian digital bank issuers, marking the entry of Allo Bank Indonesia as the newest major player from the new economy sector into the banking industry in Indonesia. Several large companies such as CT Corp, Salim Group, PT Tbk (BUKA), Grab, Traveloka, Carro, and Growtheum Capital Partners to PT Allo Bank Indonesia Tbk (BBHI) will further enlarge Allo Bank’s business ecosystem going forward.

            The seven companies stated that they would absorb a total of 70% of new shares in the corporate action to increase capital with Pre-emptive Rights (HMTED) or PT Allo Bank Indonesia Tbk (BBHI) rights issue worth Rp4.8 trillion. The new shares from the rights issue will be traded on the IDX from January 13 to 19. PT Tbk (BUKA) will hold 11.49% stake in Allo Bank, Salim Group will hold 6.00% stake, two Singapore-based companies, Grab and Carro, both through separate affiliates, will each hold 2, 07% and 0.69%, while CT Corp will hold a 1.88% stake.

            The investment into Allo Bank by Bukalapak, Grab and Carro is the latest example of growing interest among technology companies in the ASEAN region in Indonesia’s digital banking sector. Previously, Indonesia’s largest private technology company GoTo has invested in and owns 21.4% shares of digital lender Bank Jago, while Singaporean technology conglomerate Sea Ltd has transformed Bank Kesejahteraan Ekonomi into SeaBank’s digital bank in Indonesia after the acquisition.

            “Online and offline ecosystems are now in the bank, and with the right strategy, leadership, execution, and technology, Allo Bank become a serious challenger in Indonesia’s digital banking landscape,” added the multinational financial services provider from the United States (US), Citi.

Indonesia’s Financial Services Authority (OJK) relaxed foreign ownership rules on banks last year, which is likely to spur more regional technology players to enter the banking business. Mini-banks in Indonesia need to raise funds to meet minimum capital requirements, while technology companies see opportunities to take a stake in an industry they see as the next growth sector.

January 7, 2022, CNBC Indonesia