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Two of Korea's major insurance companies are showing keen interest in joining the ongoing competition to operate the country's third internet-only bank, in a move to capitalize on new opportunities created by the new digital entity.
The move pursued mostly in the form of equity investment is part of efforts to find new subscribers in their 20s and 30s through the digital platform, to diversify the source of profits amid a market currently nearing saturation.
Kyobo Life Insuance is the second-largest life insurer and Hyundai Marine and Fire Insurance is the third-largest non-life insurer.
"We are open to various ways to expand the firm's business including buying shares in a consortium that has already declared a bid to seek preliminary approval with the financial authorities," a Kyobo official said.
"Nothing has been determined yet. More specifics and particulars will be made public later."
Similarly, Hyundai is mulling joining the consortium led by Shinhan Financial Group.
Shinhan said Feb. 11 that it will form a consortium with Viva Republica, the operator of Toss, a popular mobile transfer app.
"We are considering whether to join the consortium," a Hyundai official said.
"We cannot comment further until directed otherwise," he added.
The latest move is intensifying competition to create the country's third internet-only bank.
Korea's two existing internet-only banks are Kakao Bank, operated by mobile messaging service provider Kakao Corp., and K bank, operated by telecommunications firm KT.
Hana Financial, the nation's fourth-largest financial group by total assets, formed a consortium with SK Telecom, the country's largest mobile carrier, and Kiwoom Securities, an online brokerage services provider.
KB Financial has a 10 percent stake in Kakao Bank, established by Korea Investment Holding and Kakao Corp.
Woori Financial has a 13.79 percent stake in K bank, established by KT, the second-largest mobile carrier.
According to data from the Financial Supervisory Service (FSS), the net income of insurers was 7.27 trillion won ($6.49 billion) in 2018, a 7.4 drop from a year earlier.
By contrast, the asset of internet-only banks stood at 12.7 trillion won, nearly double that from a year earlier.
While they have yet to report net income, the rapid increase in assets only about a year after their launch in 2017 is boosting hopes that they will become profitable in the coming years.
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