By Kim Yoo-chul
Korea's top financial regulator said Monday it would keep an eye on the country's leading internet banks including Kakao Bank and K bank to prevent customers from being exposed to issues associated with the risks and advantages of online banking.
"The Financial Supervisory Service (FSS) has recently created a team which only inspects ‘things' related to activities of internet banks as more Koreans rely on internet-only banking as their way of doing business," a high-ranking FSS source said.
The new team has been assigned to inspect and monitor Korea Holdings. Korea Holdings is the largest shareholder of Kakao Bank holding a 58 percent share. Also, K bank, jointly owned by Korea Telecom (KT) and Hanwha Life, has also been included on the list of internet banks to be monitored by the FSS.
FSS confirmed the establishment of the new team; however, the regulator added further details about the team and inspection plans have yet to be made.
"Internet banks should win trust from the public as they've been gaining keen popularity with internet finance among Korean customers. As a financial regulator, we will keep an eye on them," an FSS official said.
Kakao Bank and K bank have become the first in online banking in Korea's banking sector and the first new banks in 20 years. They are signing up new customers by the millions.
K bank, which began operating in April of last year, has extended about 1.14 trillion won in consumer credit loans including deposits as of January this year, exceeding its earlier target. It plans to expand its business territories into apartment loans and credit cards starting this year.
Kakao Bank, which started its operations in July of last year, plans to sell new shares worth about 500 billion won next month, increasing its total capital to 1.3 trillion won.
Their steep and continued growth is noticeable. Given Korea's solid telecom infrastructure, the country is one of the world's most-wired societies. Industrial officials say growth will be a plus factor in the local banking industry, which has been stagnant amid rising credit costs, tightening regulations and thin interest margins.
Kakao Bank is adding the huge advantage of its link to Kakao Talk, which has more than 43 million users among the nation's population of 55 million, indicating Kakao Bank's customer base is very solid. Also, KT is the country's dominant fixed-line operator, helping K bank offer stable online banking services without line disruptions.
While it's fair to say that customers of internet banks are attracted by the high interest rates offered by the two companies and the convenience of non-physical banking, many can't escape from some lingering doubts about these upstarts in the ether.
Identity theft, phishing and access and online services are considered possible risks and advantageous factors, the issues FSS is expected to pay more attention to.
"Regarding the issue of identity theft, protecting customer details is our priority. We've acknowledged that all customer information that is associated with personal accounts will be at risk as well. Our system is safe and we will perform upgrades on an as-needed basis," an official at K bank said.
Kakao Bank said it will expand its communication channels with the FSS.
Korea's top financial regulator said Monday it would keep an eye on the country's leading internet banks including Kakao Bank and K bank to prevent customers from being exposed to issues associated with the risks and advantages of online banking.
"The Financial Supervisory Service (FSS) has recently created a team which only inspects ‘things' related to activities of internet banks as more Koreans rely on internet-only banking as their way of doing business," a high-ranking FSS source said.
The new team has been assigned to inspect and monitor Korea Holdings. Korea Holdings is the largest shareholder of Kakao Bank holding a 58 percent share. Also, K bank, jointly owned by Korea Telecom (KT) and Hanwha Life, has also been included on the list of internet banks to be monitored by the FSS.
FSS confirmed the establishment of the new team; however, the regulator added further details about the team and inspection plans have yet to be made.
"Internet banks should win trust from the public as they've been gaining keen popularity with internet finance among Korean customers. As a financial regulator, we will keep an eye on them," an FSS official said.
Kakao Bank and K bank have become the first in online banking in Korea's banking sector and the first new banks in 20 years. They are signing up new customers by the millions.
K bank, which began operating in April of last year, has extended about 1.14 trillion won in consumer credit loans including deposits as of January this year, exceeding its earlier target. It plans to expand its business territories into apartment loans and credit cards starting this year.
Kakao Bank, which started its operations in July of last year, plans to sell new shares worth about 500 billion won next month, increasing its total capital to 1.3 trillion won.
Their steep and continued growth is noticeable. Given Korea's solid telecom infrastructure, the country is one of the world's most-wired societies. Industrial officials say growth will be a plus factor in the local banking industry, which has been stagnant amid rising credit costs, tightening regulations and thin interest margins.
Kakao Bank is adding the huge advantage of its link to Kakao Talk, which has more than 43 million users among the nation's population of 55 million, indicating Kakao Bank's customer base is very solid. Also, KT is the country's dominant fixed-line operator, helping K bank offer stable online banking services without line disruptions.
While it's fair to say that customers of internet banks are attracted by the high interest rates offered by the two companies and the convenience of non-physical banking, many can't escape from some lingering doubts about these upstarts in the ether.
Identity theft, phishing and access and online services are considered possible risks and advantageous factors, the issues FSS is expected to pay more attention to.
"Regarding the issue of identity theft, protecting customer details is our priority. We've acknowledged that all customer information that is associated with personal accounts will be at risk as well. Our system is safe and we will perform upgrades on an as-needed basis," an official at K bank said.
Kakao Bank said it will expand its communication channels with the FSS.
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