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| A woman uses the Toss mobile financial services app in this file photo. / Courtesy of Viva Republica |
By Park Jae-hyuk
The Toss Bank consortium led by the mobile money transfer app operator Viva Republica received a preliminary approval for a license to operate the nation's third internet-only bank, the Financial Services Commission (FSC) said Monday.
According to the financial regulator, the new digital bank is expected to make its debut in July 2021, as it needs about a year and a half to prepare for the business.
Viva Republica was rejected during a previous round of bidding in May, due to its poor financial stability.
As the fintech firm attracted KEB Hana Bank, Standard Chartered Bank Korea, the Korea Federation of SMEs and other affluent institutional investors in its second attempt, the FSC decided to grant preliminary approval to the consortium in the latest bid.
"The consortium's largest shareholder has a strong determination to contribute to financial innovation and its business plan is well-prepared in terms of innovativeness, inclusiveness and stability," said Yoon Chang-ho, the Financial Services Commission's (FSC) director general for financial industry. "It is satisfies the what we expect from internet-only banks."
The Soso Smart Bank and the Familia Smart Bank consortia, both of which had applied for the license along with the Toss Bank consortium in October, failed to get preliminary approval.
"The Soso Smart Bank consortium's fundraising and business plans were inadequate, so we thought it was not qualified to manage an internet-only bank," Yoon said. "The Familia Smart Bank consortium could not submit the necessary documents, so it withdrew from the bid Dec. 11."
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| Yoon Chang-ho, the Financial Services Commission's (FSC) director general for financial industry, announces the result of preliminary screening of bidders for the third internet-only bank at the Government Complex Seoul, Monday. / Courtesy of FSC |
Viva Republica said the Toss Bank will offer innovative financial products to its customers, based on 16 million Toss app users and customers of strategic investors taking part in the Toss Bank consortium.
According to the fintech firm, the Toss Bank will serve as a challenger bank for the "underbanked," fulfilling the needs of individuals and small business customers, including those with thin files and mid-range credit scores.
"Toss has already become the leading financial super app in Korea," Viva Republica CEO Lee Seung-gun said. "With a digital bank license, we will be able to broaden our product offering, so we can accelerate our mission to innovate the financial industry."
The Toss Bank consortium will be able to apply for final approval, as soon as it is equipped with the experts, organization and equipment required to run a banking business.
If the FSC grants the final approval, the Toss Bank consortium can run the internet-only bank, engaging in fierce competition with Kakao Bank and K bank.
Kakao Bank has dominated the market since its launch in 2017, because K bank has faced difficulties in capital increase due to its largest shareholder KT's previous violation of the antitrust law.
The envisioned revision of the Internet-only Bank Act, however, is expected to intensify the competition among the digital banks, as the new law will allow KT to inject capital into K bank.
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