WeLab eyes a ‘pan-Asia franchise’ as digital banking footprint grows

Until two years ago, Hong Kong-based WeLab was primarily known for fintech services that run the gamut of online consumer lending, payments, and enterprise solutions. That changed in 2019, when WeLab Bank became one of eight virtual banks in the city.

“I always joke that when I started 10 years ago, I didn’t want to be in [banking] anymore. That’s why I started a fintech company,” Simon Loong, founder and CEO of WeLab, told Tech in Asia on the sidelines of the Forbes Global CEO Conference in Singapore.

WeLab founder and Group CEO Simon Loong / Photo credit: WeLab

The fintech firm never planned to grow into a bank, says Loong, who spent over a decade in roles at Citi and Standard Chartered Bank across four markets. However, WeLab did have to mature together with its customers or risk losing them, as their needs were evolving beyond credit.

When Hong Kong announced a licensing framework for digital banks, WeLab pounced on the opportunity. “I’ve come full circle,” Loong laughs.

Founded in 2013, WeLab has grown to serve 57 million customers across the group. Its largest business remains digital lending, which it operates across China and Hong Kong. The service is also available in Indonesia, where it is offered through a joint venture with local conglomerate Astra International called Maucash.

But the digital bank strategy may give lending a run for its money. Between the first and second quarter of this year, WeLab Bank’s average revenue per user (ARPU) increased by 50%, Loong shares.

In Hong Kong, WeLab Bank and online loans platform WeLend serve “close to half a million customers” and have seen a 155% cumulative growth in unsecured lending balances between February 2020 and July 2022.

As a group, WeLab has been profitable since 2017. Based on “current forecasts,” he expects that WeLab Bank will hit profitability in 2024.

It’s not about deposits

As one of the industry’s pioneers, Hong Kong’s virtual banks can offer emerging players in Southeast Asia a lesson or two.

But in terms of deposits and number of users, WeLab – whose backers include Allianz X, Li Ka Shing’s TOM Group, Khazanah Nasional, and Sequoia Capital – may not be a frontrunner among its peers in the city.

On both counts, WeLab Bank trails behind Hong Kong’s top two banks: ZA Bank, which is backed by ZhongAn Insurance, and Mox Bank, which counts Standard Chartered as an investor. Traditional banks in the city typically offer a 0.001% rate on current account deposits. ZA Bank gained an early lead by offering deposit rates as high as 6.8% at launch.

Despite the fanfare and attractive sign-up bonuses, Hong Kong’s eight digital banks drew in a combined HK$19 billion in deposits at the end of March 2021. That’s just about 0.1% of the city’s total deposits, according to the Hong Kong Monetary Authority.

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