Kakao, Naver in battle for financial services platform
By Jun Ji-hye
Kakao and Naver have begun fiercely competing in the financial services sector with the latter moving to establish a new fintech entity by spinning off its mobile payment division, according to industry officials, Sunday.
Kakao, the operator of the nation's dominant messaging app KakaoTalk, has already entered into the financial arena, with its internet-only bank, Kakao Bank, and fintech subsidiary, Kakao Pay.
The respective mobile payment services offered by the two IT giants have not greatly overlapped so far. Kakao's service is based on its mobile messenger, while Naver's is based on the internet portal.
But the situation is changing as Naver plans to set up a new company, tentatively named Naver Financial, Nov. 1 with the aim to evolve into a professional, comprehensive financial company beyond offering simple payment and remittance services.
The spin-off decision, announced Wednesday, came amid the increasing popularity of its mobile payment service, Naver Pay, which has attracted more than 10 million monthly users.
“Utilizing our experience from the mobile payment service, the new company will make innovative attempts to offer new functions for users,” a Naver official said.
Mirae Asset Daewoo plans to invest more than 500 billion won ($422 million) in the new company, according to Naver.
Korea Investment & Securities analyst Jeong Ho-yoon said the spin-off decision showed Naver's willingness to actively utilize its IT capability in the financial sector.
“Considering that Naver possesses various big data, and technologies to analyze such data, the company does have sufficient competitive power to expand into the fintech business,” the analyst said.
Kakao has also been seeking to enhance its financial services, releasing simple online and offline payment services among others related to finance.
Kakao Pay, which has provided mobile payments, remittances and investments, launched its own mobile app in July and is now offering insurance and other financial services to expand its presence in the fintech market.
Internet-only bank, Kakao Bank, which was launched in 2017, is also cited as a great strength. It has been outperforming the nation's other internet-only bank, K bank, in terms of popularity and number of users, which surpassed 10 million, July 11.
On Wednesday, the Financial Services Commission (FSC) approved Kakao's application to become the largest shareholder of the internet-only bank subsidiary.
The approval allows Kakao to better integrate its ICT infrastructure with its financial services.
“Kakao is expected to expand its lineup of financial products and make inroads into new businesses such as credit card services,” eBEST Investment Securities analyst Jeon Bae-seong said.