Internet-only banks bolster in-person services unlike traditional lenders

Kbank headquarters in Seoul / Courtesy of Kbank

By Lee Kyung-min

• Published Jan 7, 2025 4:40 PM KST
• Updated Jan 8, 2025 1:19 PM KST

Internet-only lenders are strengthening their in-person services, bucking the industry-wide trend whereby bank branches are increasingly being closed as part of an accelerated digitization drive, market watchers said Tuesday.

The collective move by the three internet-only lenders — KakaoBank, Kbank and Toss Bank — seeks to establish greater brand recognition. This is a critical strategy as new entrants in the financial market, long been dominated by their five traditional peers, KB Kookmin, Shinhan, Hana, Woori and NH NongHyup.

Kbank has increased its ATMs to 43, up from only five over the past two months.

Most of them are set up in subway stations to enhance accessibility.

The internet-only lender says the machines are great for brand advertising.

“Previously, the cash deposit and withdrawal machines were limited to Gangnam and Sadang stations, among others,” Kbank said. “We now have added 38 new ones in Seoul Station, as well as Sindorim and Hongdae stations.”

The annual operation cost of over 10 million won ($6,888) is well worth it since the electronic advertising boards bolster brand recognition, the lender said.

“The functions of the ATMs are not limited to cash-related services anymore," the bank said. "The screens are a great way to connect with both our current customers and potential customers. We plan to increase the number of ATMs, as confirmed by customer feedback.”

Financial Supervisory Service data showed the number of ATMs installed by banks came to 27,347 as of June 2024, down from 31,718 as of the end of 2021.

Toss Bank recently opened the Toss Bank Lounge on the ground floor of a renovated customer center at the Korea Institute of Intellectual Property in southern Seoul's Gangnam.

The lounge encompasses a public and private space.

Customers can relax in the public space or wait before using in-person services. The private space provides consultations.

KakaoBank will open “Holiday in Moim Agit,” a pop-up space for its group account holders from Jan. 14 to 25 in eastern Seoul's Seongsu-dong. About 11 million users will be able to visit the place for rest. Reservations can be made through Jan. 13.

Kbank's net profit in the first nine months of last year was 122.4 billion won.

The number of customers climbed to 12.05 million as of the third quarter of last year, up from 7.17 million in 2021.

KakaoBank’s net income in the first nine months of last year stood at 355.6 billion won, certain to raise its annual figure to an all-time high. The lender’s annual net income was 354.9 billion won in 2023, up from 13.7 billion won in 2019.

Toss Bank’s July-September net income came to 10 billion won, up 3.1 percent from the previous quarter. The figure for the first nine months stood at 34.5 billion won, a turnaround from a deficit of 29.9 billion won last year.