Planned gov’t restructuring lowers chances for launch of 4th internet-only bank this year

A bank in Seoul / Korea Times file

The government’s plan to grant a license for a fourth internet-only bank hangs in the balance, weakened by the potential restructuring of economic and financial ministries and regulatory bodies, market watchers said Tuesday.

The future of the fourth digital lender will be determined not by its commercial viability, but by administrative continuity. The potential governmental restructuring has cast doubt over whether the fostering of digital competition will remain as a policy priority.

The Financial Services Commission (FSC), the country’s top financial regulator overseeing the licensing process, will be restructured if the plan goes through.

Its financial policy functions and oversight authority would be absorbed by the finance ministry, which is also potentially undergoing an organizational split.

The FSC is in the final stages of reviewing preliminary license applications submitted by four consortiums, led respectively by Soho Bank, Soso Bank, AMZ Bank and a bank representing the interests of overseas Koreans.

However, more than five months have passed since the document submission deadline, but the applicants are still awaiting a decision.

The delay follows months of political uncertainties triggered by the former President Yoon Suk Yeol’s martial law declaration last December.

The former president has since been impeached and is facing criminal charges. His wife, Kim Keon Hee, was recently indicted on bribery charges.

The fourth internet-only bank was a key policy drive under the Yoon administration. It sought to boost competition in the banking sector, long dominated by a small number of big players and heavy industrywide resistance to change.

Meanwhile, concerns are growing that the new finance ministry may scrap and revisit the entire licensing framework once it assumes control.

FSC Chairman nominee Lee Eog-weon said he would “look into the months of progress” during his confirmation hearing.

This unclear stance fanned fears that the drive will lose momentum altogether.

Korea’s first three internet-only banks are KakaoBank, Kbank and Toss Bank.