Sea Ltd Is Quietly Building Up a Fintech Empire

Key Points

• The fintech business started as an e-wallet, but expanded into other use cases like bill payments, QR codes, and credit.

• The credit business is growing rapidly.

• Monee is riding on multiple tailwinds.

Sea Limited (NYSE: SE) is best known for two things: Shopee, its e-commerce giant that dominates Southeast Asia, and Garena, the once high-flying gaming business that's showing signs of a comeback. But under the radar, Sea has been steadily nurturing a third business that could one day rival its other companies.

That business is Monee (previously known as SeaMoney), Sea's fintech arm. While investors often focus on Shopee's market share or Garena's user trends, the fintech story unfolding within Sea deserves the attention of investors. Here's why.

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From e-wallet to ecosystem

Monee started as a digital wallet to support transactions on Garena and Shopee. It was a logical move: Reduce payment friction on the gaming and e-commerce platform and capture more value per transaction. But what began as a support function evolved into a stand-alone growth engine.

Today, the fintech business spans mobile wallets, consumer lending, payment processing, and even insurance and financial services. Users can pay bills, top up phone credits, make offline purchases via QR codes, and increasingly access buy-now-pay-later or personal credit offerings -- all within the Sea ecosystem.

In the first quarter of 2025, Sea's digital financial services segment generated $787 million in revenue, representing a 58% year -over-year increase. Just as impressively, adjusted EBITDA came in at $241 million, marking the fourth consecutive quarter of profitability -- a remarkable turnaround for a segment that was burning cash just two years ago.

Monee's rapidly expanding finances were a result of its strategy of first capturing users with basic mobile wallet services -- which usually don't generate much revenue -- and then upselling other services, such as credit and insurance products.

As Monee evolves into an ecosystem, it has the potential to offer a wide range of financial services beyond credit, which should open up new revenue streams.

Digital lending: The elephant in the room

One of the most compelling parts of Sea's fintech business is its digital lending, a space that remains underpenetrated across Southeast Asia. Millions of small businesses and consumers are underserved by traditional banks, creating a significant opportunity for platforms like Sea, which already possesses deep data, user trust, and distribution reach.

To capitalize on the significant credit opportunity in this region, Sea actively pursued banking and digital lending licenses in each country. So far, it has set up digital banking arms in Indonesia and the Philippines (under the SeaBank brand) and in Singapore (under MariBank). Beyond these banking businesses, the fintech also offers basic credit products under SPayLater in multiple countries across Southeast Asia.

Unsurprisingly, the fintech business delivered some solid performance recently. In the first quarter of 2025, loans outstanding surged 77% year over year to $5.8 billion, driven by rapid growth in borrowers. For perspective, Monee added more than 4 million first-time borrowers in that quarter, bringing the total number of active loan users to over 28 million.

Better still, the solid growth did not come at the expense of risk management, as the 90+ days non-performing loan (NPL) ratio declined from 1.4% a year ago to 1.1%. If the company can maintain its risk management while growing its loan book, it will inevitably report better profits in the coming quarters.

Favorable macro tailwinds

Southeast Asia remains one of the most promising fintech markets globally. Consider this: The Temasek-Bain-Google report states that over 70% of adults in the region stay underbanked or unbanked. This low penetration sets the right environment for tech companies like Sea to capture these customers.

To this end, the growing smartphone and internet penetration provides ample opportunity for the company to capture these users. Furthermore, governments are increasingly supportive of digital financial inclusion, with initiatives such as digital banking licenses in Indonesia, Malaysia, and the Philippines.

Additionally, Monee's deep integration with Shopee provides a customer acquisition advantage, and its expanding suite of financial products enables it to increase lifetime value per user -- much like how Ant Group scaled alongside Alibaba.

What it means for investors

Sea Limited is no longer just a two-engine company. Shopee remains dominant, Garena is healing, and Monee may be the surprise that carries a significant upside in the coming years.

If it continues to execute, this fintech engine could become the company's next most valuable asset. Long-term investors should keep a close eye on its continued progress.

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Lawrence Nga has positions in Alibaba Group and Sea Limited. The Motley Fool has positions in and recommends Sea Limited. The Motley Fool recommends Alibaba Group. The Motley Fool has a disclosure policy.