Internet-only banks urged to keep innovating

TossBank, KakaoBank, K bank CEOs pledge further innovation

By Lee Yeon-woo

In 2017, the Korean government approved the launch of internet-only banks, aiming to boost competition in the industry and increase customer convenience. As five years have passed since then, it is time to ask, “Have internet-only banks successfully played their expected roles?”

At a seminar titled “Five Years after the Internet-Only Banks: New Banking, Make Money,” held at the National Assembly, Monday, experts acknowledged that these banks have successfully settled in the market with distinctive services. But still, they raised concerns that internet-only banks need to innovate further to disrupt the current oligopolistic banking industry and become true game-changers.

“If internet-only banks offer services similar to traditional banks, the first intended aim when adopting such banks will be overshadowed,” Shin Sung-hwan, a member of the Bank of Korea's monetary policy committee, said during the seminar.

“Internet-only banks can pressure traditional banks to innovate and cut costs. With loans for low- and medium-credit customers, they can include those who have been underserviced by traditional banking industries. They also can actively participate in constructing finance for the future, such as a token economy.”

Experts also discussed the future priorities of banks, including the critical issue of risk management, which has become more pressing following the abrupt closure of Silicon Valley Bank. Increasing attention to data security was noted too.

“Internet-only banks recently expanded loan products for low- and medium-credit customers to reach their goals,” said Lee Byung-yoon, a senior researcher at the Korea Institute of Finance. “However, under these market circumstances, the number of non-performing loans can be increased.”

“With wider use of data, the public is becoming more sensitive to data security,” said Min Se-jin, an economics professor at Dongguk University. “If banks can set strict standards and effectively communicate the importance of data security to the public, they can lead the market.”

The CEOs of the three internet-only banks ― KakaoBank, K bank and TossBank ― also attended the seminar and made commitments to drive innovation in the industry.

Yun Ho-young, CEO of KakaoBank, stated that his bank will continue to innovate and develop internet banking services that contribute to the financial market and the economy. He emphasized that the bank is committed to maintaining soundness while providing more efficient services to customers.

Suh Ho-sung, CEO of K bank, emphasized that the bank's main tasks are to lead innovation in the banking industry and maintain customer convenience.

Hong Min-taek, CEO of TossBank, pledged to enhance the soundness of the bank, improve alternative credit evaluation, strengthen non-performing loan prevention and ensure consumer protection without any gaps. He also stated the bank's commitment to promoting loans for customers with low- to medium-credit ratings.