K bank to open on April 3
By Nam Hyun-woo
K bank will open next month as Korea’s first internet-only bank, but questions still linger on whether it will be able to distinguish itself as a viable online lender.
According to K bank ― the establishment of which was spearheaded by the country’s top telecom operator KT ― it will start its retail operations on April 3 when CEO Shim Sung-hoon is scheduled to present the bank’s key businesses to the media.
They will feature quick mobile remittance based on phone numbers and medium-level interest rate loans through sophisticated credit ratings using big data.
Though the bank refused to disclose details, industry sources said it will likely allow a K bank account holder to send money to another K bank customer through a text message such as “remittance # amount.”
The bank will provide loans with interest rates between 4.9 and 15.5 percent ― a niche market not covered by commercial banks and card issuers. K bank also is expected to use fingerprint ID as an authentication tool for loans.
However, it remains to be seen whether the bank can make its presence felt via unique technologies, according to observers.
The Banking Act stipulates strict separation between finance from industry, particularly restricting industrial capital from holding more than 4 percent of shares with voting rights in a bank. KT holds 8 percent in K Bank but just half have voting rights, compared with Woori Bank, which has a 10 percent stake with voting rights.
Hence, the largest shareholder is Woori Bank, not KT, which critics say is against the purpose of an internet bank aimed at encouraging info-tech firms to play a leading role in financial innovation.
“In order to operate its lending businesses smoothly, the bank has to increase its capital through various means,” a Seoul analyst said. “The bank’s capital stands at 250 billion won and it wants to add another 250 billion won by the end of this year so as to meet the BIS capital adequacy ratio.
“But there is no way for KT to increase its shares in the bank, unless there is a revision of the act. Under the current system, there is a possibility that internet-only banks may end up being also-rans.”
The government is striving to deal with the situation in two ways ― by easing regulations so industry can hold up to a 10 percent stake in banks and introducing a special law that governs internet-only banks.
Both have been tabled at the National Assembly but have stalled.
Initially, KT expected the revisions might get the parliamentary nod in February. Amid the political turmoil caused by the corruption scandal involving former President Park Geun-hye, the assembly failed to get this done.