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Rebidding for third internet-only bank kicks off amid lack of interest

Financial authorities on Thursday began to accept applications for a second round of bids for a preliminary license to operate the nation’s third internet-only bank, according to the Financial Services Commission.

Unlike the first round earlier in the year, however, concerns are mounting that market expectations may have soured, as only one consortium confirmed its bid on the first day.

“The business license for a new internet-only bank is the FSC’s top priority task for the second half of the year,” said FSC Chairman Eun Sung-soo in a press conference.

In May, two consortia were engaged in heated competition -- one led by Viva Republica, operator of mobile money transfer app Toss, and securities firm Kiwoom -- but both failed. Citing a lack of technical progress in the submitted business plans, the FSC vowed to reopen bidding within the year.

Kiwoom Securities headquarters in Yeouido, western Seoul. (Yonhap)
Kiwoom Securities headquarters in Yeouido, western Seoul. (Yonhap)

The two frontrunners are expected to be reapply in the second round of bidding, but are facing hurdles ahead as some of their financial partners have been gesturing at pulling out from the business.

KEB Hana Bank has recently been reported as considering to withdraw from Kiwoom’s consortium, which may trigger mobile carrier SK Telecom to follow suit, according to industry observers.

Meanwhile, a new consortium -- led by the newly established cooperative union Next Network Security Provider -- vowed to submit a bid on Tuesday, which is the last day of the application period.

Its last-minute move is largely attributable to its lack of valid financial partner and weak capital plan.

“With the result of the first round of bidding, the firms are likely to feel uncertain about their business plans and whether their investment will pay off this time,” said Korea Capital Market Institute analyst Hwang Se-woon.

“Also, with its existing predecessors such as K bank and Kakao Bank struggling to bring change to the market while having an iron grip on the market share, it will be difficult for the newcomer to make significant waves in the industry,” he added.

K bank and Kakao Bank -- the only online-only banks operating here at the moment -- were launched in 2017. Their appearance challenged traditional banks to cut their commission fees and bolster their online transactions.