Internet-only banks to open this month

By Kim Tae-gyu

Internet-only banks will come to town this month, disrupting the dominance of four big commercial lenders including KB Kookmin, Shinhan, Woori and KEB Hana banks.

K-Bank, which won government endorsement last month, plans to begin operations late this month or early next to become the nation’s first newly opened bank in 25 years.

Kakao Bank, which seeks to get the regulator’s nod this month, also strives to follow suit in the first half of this year to compete with K-Bank and the existing players.

K-Bank’s CEO Shim Sung-hoon and other officials have iterated that the outfit will capitalize on its strengths of easy accessibility and low-cost structure compared to conventional lenders.

“K-Bank would be available around the clock. It would be the first bank on your palm,” Shim said last month after K-Bank received the green light from the Financial Services Commission.

The full-fledged internet- and mobile-specific bank will not run offline branches. Instead, customers can deal with banking services through computers, mobile phones and ATMs.

As a result, users will be able to create a bank account in 10 minutes and wire money and make loan requests on their computers or handheld gadgets without having to visiting a brick-and-mortar branch.

K-Bank has around 200 employees compared to more than 10,000 for domestic commercial banks.

K-Bank is expected to offer attractive interest rates to depositors on the back of its saved costs by not maintaining a large workforce or a lot of real estate.

K-Bank is also expected to extend loans with interest rates between 7 percent and 8 percent for those who have low credit ratings but are able to meet their debt obligations.

Toward that end, observers point out that K-Bank will use its knack for big-data analysis by working on applicants’ history of phone bill payments with their consent.

K-Bank’s largest shareholder is the top-tier telecom carrier KT, with others including Woori Bank, Hanwha Life Insurance, GS Retail and Danal.

In contrast, Kakao Bank is spearheaded by Kakao, the operator of top mobile messenger Kakao Talk and No. 2 web portal Daum, with other shareowners such as KB Kookmin Bank and Korea Post also participating.

The biggest advantage of Kakao Bank is its popular platform Kakao Talk _ more than 40 million out of the total 50 million Korean citizens use the instant messaging service here.

Kakao Bank hopes its large customer base will help its new bank survive and thrive in the saturated local banking market.