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.
Competition intensifies between internet banks
By Kim Bo-eun
By Kim Bo-eun
Competition is expected to heat up between the nation's two internet-only banks with K bank looking to challenge Kakao Bank's leading position through the launch of innovative products following a boost in its capital base.
The gap between the two widened greatly after K bank virtually suspended operations for over a year due to a lack of capital, as it faced issues regarding its shareholder structure.
K bank was launched as Korea's first internet-only bank in April 2017, followed by Kakao Bank in July the same year. The latter had an advantage as an affiliate of the IT conglomerate Kakao, a brand familiar to the public due to the dominant mobile messenger app Kakao Talk.
Kakao Bank's business is growing rapidly. With over 12 million users, the lender posted a 26.8 billion won net profit in the second quarter, double its figure for the whole of 2019. The bank's net profit for the first half came to 45.3 billion won, a 372 percent surge from earnings from the same period of last year.
Kakao Bank attributed this to increased interest income from the growth in loans. The lender also said its banking app has the largest number of active users among the applications of local banks. Kakao Bank's growth is attributed to the attention it has given to improving the user experience of its app, given its strength in tech capabilities backed by Kakao.
K bank has yet to switch to a surplus, but is making a comeback with its new products. CEO Lee Mun-hwan stated in a press conference last week that the lender will take a different strategy from Kakao Bank ― it will focus on maximizing synergy with its shareholders, which include BC Card, NH Investment & Securities and Woori Financial Group.
The lender also has an advantage as it has ties with telecommunications giant KT, which led K bank's launch. The bank's largest shareholder BC Card is an affiliate of KT. The K bank CEO was formerly the head of BC Card and also previously worked as a key executive at KT. K bank is seeking to incorporate telecommunication services into its business.
Meanwhile, a third internet bank is set to be launched next year by financial services platform Toss. A Toss official said Toss Bank is set to focus on loans for small businesses and people with poor credit histories.
"We aim to become a challenger bank focusing on inclusive finance and innovation," an official said.
Toss Bank is in the process of setting up its infrastructure and building a credit rating model.
An official at an internet bank said "It is good that the pie is getting bigger. If other players do well, this exerts a positive influence for us because it can serve as a stimulus and help to enlarge the market," he said.