Line Co-CEO Says Fintech Business May Break Even in 1 to 2 Years

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Japan’s Line Corp., which has been investing heavily into fintech operations, may see the new businesses break even in as early as one to two years, co-Chief Executive Officer Shin Jung-ho said in an interview.

The services, which will eventually include banking, stock trading, loans and insurance, could turn a profit in three years, depending on how quickly the company can get the necessary licenses and attract users, Shin said. The next two to three years are a crucial window for figuring out user needs and the company is focusing on the home market and Taiwan first, he said.

The operator of Japan’s most popular messaging platform, facing a stagnant user base and a business model that relies on advertising, is doubling down on payments to underpin other financial offerings and transform into an all-in-one app like Tencent Holdings Ltd.’s WeChat. The company last year raised 148 billion yen ($1.4 billion) in a convertible bond sale to help fund the expansion. Its shares fell to the lowest since the initial public offering in June on the prospects of losses ahead.

“Fintech itself is a proven monetized model, the only problem is how fast we can secure a meaningful size of users,” Shin said in a interview with Bloomberg Television at the company’s Tokyo headquarters. “We need three to four years of investment to establish” the business, he said.

Key Insights

• Subscribers to financial services may eventually approach those users in its messaging service, Shin said. Line has 80 million monthly active users in Japan, 21 million in Taiwan, 44 million in Thailand and 19 million in Indonesia.
• Line is already the dominant player in payments in Taiwan.
• The company aims to start operations at Line Bank, a partnership with megabank Mizuho Financial Group Inc., in Japan next year, pending regulatory approval.
• Despite having an early foothold in many global markets, Line has focused its messaging operations on four Asia countries. Fintech service may serve as a vector for global expansion again, Shin said.
• “The messenger competition is over. Nowadays we need another innovation. Fintech can be that candidate.”

--With assistance from Adrian Wong.

To contact the reporters on this story: Stephen Engle in Beijing at sengle1@bloomberg.net;Pavel Alpeyev in Tokyo at palpeyev@bloomberg.net

To contact the editors responsible for this story: Edwin Chan at echan273@bloomberg.net, Peter Elstrom

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