Bo-eun leads the digital content team. She has covered foreign affairs, North Korea, tech, economy and gender issues at The Korea Times. She did a short stint at the South China Morning Post in Hong Kong, where she obtained a new perspective on news production and life. Small sources of joy for her are lounging in the sun, having a good latte and swimming.
Internet-only banks set to challenge major lenders
By Kim Bo-eun
By Kim Bo-eun
Competition in the banking industry is expected to heat up next year as regulations limiting the growth of internet-only banks have been cleared paving the way for them to do business in a more aggressive manner.
Based on recent developments, the nation's two internet only-banks ― Kakao Bank and K bank ― are set to be able to increase their capital base to expand their business.
Among them, Kakao Bank now has Kakao as its largest shareholder, after the financial authorities approved the move last week.
Kakao now owns 34 percent of Kakao Bank's shares, after the former majority shareholder, Korea Investment Holdings, sold its 16 percent stake to Kakao.
Kakao Bank plans to strengthen collaboration with Kakao's other units to offer better products and services as well as achieve stability in terms of capital.
“Kakao Bank will likely benefit from Kakao becoming its majority shareholder, based on the latter's strength as an ICT firm,” a Kakao Bank official said.
Kakao Bank attracted over 10 million users in two years since the bank was launched in 2017. This is the fastest growth rate of customers for an internet bank in the world, with the exception of internet banks in China. China is excluded due to the size of its population.
It posted its first surplus in the first quarter of this year, and has maintained a surplus through the third quarter. It made a 15.4 billion won net profit in the first three quarters of the year.
The bank is also seeking to go public next year, which will significantly raise the amount of capital it holds.
In the meantime, K bank posted a net loss of 63.5 billion won in the first three quarters. Its number of customers stands at 1.15 million.
K bank, which had been struggling due to a lack of capital, is also set to see its problems resolved.
Revisions to the regulations on internet banks were proposed that state entities seeking to become majority shareholders will not be disqualified for previously violating anti-trust regulations.
The revisions were passed by the National Assembly Legislation and Judiciary Committee last week. While the bill has yet to pass a plenary session vote, views are that the path for KT to become the majority shareholder of K bank will likely be cleared.
As the company running K bank, KT requested the Financial Services Commission (FSC) to review its eligibility to become a majority shareholder of the bank in March, after revisions to regulations enabled nonfinancial companies to become majority shareholders of internet banks.
However, the FSC halted its review because KT was under investigations for allegations that it violated fair trade regulations.
Existing regulations require that companies seeking to become majority shareholders of internet banks should not have been subject to investigations for this in the preceding five years.
K bank had hoped for KT to become its majority shareholder, as a means to increase its capital base.
K bank halted loans in recent months due to its lack of capital.
Next month, the financial authorities will unveil the company that will receive preliminary approval as the third internet bank. This is widely expected to be Viva Republica, which runs the financial platform Toss.
This is because it has resolved capital issues that made the authorities conclude Viva Republica was not eligible to run an internet bank earlier this year.
Toss formed a consortium of various companies including KEB Hana Bank and Standard Chartered Bank Korea. Having major banks as shareholders is expected to help Toss with financial stability.
This is set to create a different business environment for internet banks, compared to the past two years.
“In Korea, internet banks emerged later than in other countries. It appears there are still concerns about conducting financial transactions with a mobile phone,” said an official of an internet bank.
“More players can mean more competition, but having more players will have a positive effect on internet banks. This can help potential customers change their mindsets about how banks should operate.”