Review begins for internet-only bank approval
Financial Services Commission (FSC) Chairman Choi Jong-ku
By Lee Kyung-min
An ad-hoc review committee has begun the screening process to review whether to issue two consortiums a preliminary license to run internet-only banks, the financial authorities said Friday.
The two are led each by Kiwoom Securities, an online brokerage services provider, and Toss, a mobile money transfer app owned by Viva Republica.
The Financial Supervisory Service (FSS) chose seven members with expertise in finance, legal, consumer protection, fintech, accounting, IT security and risk management to conduct a three-day review to determine whether their business proposals meet the requirements.
Factors taken into account will include paper screening, a prior FSS review and presentation by the two scheduled for Saturday.
The whole process will be kept confidential including the personal information of the committee members.
Six evaluation criteria include innovation (35 percent), stability (20 percent), inclusiveness (15 percent), financing plan (10 percent), infrastructure and human resources (10 percent) and shareholders makeup (10 percent).
The Kiwoom-led consortium, participated in by Hana Financial Group, mobile carrier SK Telecom and online shopping mall 11st, will earn mostly high scores other than on innovation.
This is because Kiwoom, a traditional financial services firm does not bring any innovative quality strong enough to differentiate itself from the other market players.
By contrast, a budding fintech Toss-led consortium has lingering risk over financing plans following the exit of Shinhan Financial Group and Hyundai Marine & Fire Insurance, heavily loaded cash reserves.
In a hurried move, Viva Republica filled the major vacancies with Silicon Valley-based venture capital company Altos Ventures, U.K. asset management firm Goodwater Capital and Brazilian investor Ribbit Capital.
The prospect can become upbeat given the Financial Services Commission (FSC) Chairman Choi Jong-ku said Statistics Korea's classification makes it difficult to view Viva Republica as non-financial capital, a remark that helps the consortium hold greater stakes in the envisioned internet-only bank.
This helps Viva Republica which stated that it would seek a 60.8 percent stake in the Toss consortium, as Toss is registered as an “electronics financial business operator,” with much emphasis on the word “financial.”
Under related laws, a non-financial capital cannot own over a 34 percent stake in an internet-only bank, a regulation that seeks to ban large conglomerates from becoming more powerful via “legitimate” control over financial entities.
The FSC will announce the results as early as Sunday.
Consortiums granted a license will begin operation in the first half of 2020.
The existing two market players are Kakao Bank, operated by mobile messaging service provider Kakao Corp., and K bank, operated by telecommunications firm KT.