South Korean banking groups have approached the financial authorities in hopes of launching their own internet-only lenders, industry insiders said Tuesday, amid the growing popularity of platforms such as Kakao Bank.
The Korea Federation of Banks, a body that represents commercial lenders here, recently received a joint message from the banking groups, including the five major ones -- KB, Shinhan, Hana, Woori and NH -- conveying their plans to foray into the internet-only banking business, if the financial authorities approve. The federation plans to relay the message to the policymaking Financial Services Commission “soon.”
While traditional banking groups have played a role in internet-only banks as consortium partners and investors, they have yet to establish their own online-only banking businesses.
Kakao Bank and K bank -- both launched in 2017 -- are the only two internet-only banks so far. Toss Bank, under one of the nation’s best-known fintech firms, Viva Republica, is slated to be launched later this year. The financial authorities approved Toss Bank’s launch as the nation’s third internet-only bank in late 2019.
Internet-only banks have gained popularity here in recent years due to their convenient, mobile-centered and easy-to-use services compared with those of traditional lenders.
Kakao Bank posted an annual net profit of 113.6 billion won ($101.1 million) last year, an eightfold jump on-year. It currently has the largest number of users among online-only banks here with 14.1 million customers as of the first quarter of this year.
Meanwhile, the combined annual net profit of 10 Korean banking groups last year declined 0.8 percent on-year to 15.1 trillion won, according to the watchdog Financial Supervisory Service on Tuesday. The FSS cited portions of capital set aside to cushion losses from the COVID-19 pandemic coupled with compensations tied to a series of hedge fund missellings.
The introduction of online-only banks has pushed traditional banks to slash commission fees and revamp their digital services. The heads of all five major banking groups here have vowed swift digitalization of their business operations this year, as the COVID-19 pandemic fueled the use of mobile and online services.
The federation represents 22 full members, including major commercial banks and state-run lenders, as well as 36 associate members, which are mostly branches of foreign banks operating here. Internet-only banks Kakao Bank and K bank are also members of the federation.
By Jung Min-kyung (firstname.lastname@example.org)