South Korea’s market regulator, the Financial Services Commission, is set to decide on Wednesday whether to approve the operations of banking and insurance units developed by financial technology companies, amid mixed expectations for their impact on a market long dominated by traditional institutions.
At its monthly meeting, FSC will decide whether to approve Toss Bank and Kakao Pay’s digital-only insurance subsidiary.
(Financial Services Commission)
If approved, Toss Bank will become Korea’s third mobile-only bank, following K bank and KakaoBank, with its operations kicking off in September. Toss Bank will intensify the race to offer loans for people with midrange and low credit scores -- the main targets of internet-only lenders as well as a policy priority for the government.
Toss representatives said loans for people with thin financial files would account for 30 percent of the total in the first year and 44 percent by 2023, pursuing a more aggressive strategy than either K bank or KakaoBank.
Ahead of the official launch, Toss is mulling a capital increase worth 500 billion won ($450 million), with Korea Development Bank expected to join.
Kakao Pay, meanwhile, is waiting for preliminary approval, having applied Dec. 29, for its insurance unit, and expects a decision at Wednesday’s meeting. If it gets final approval later, the insurance firm will be the country’s second digital-only general insurance company, following in the footsteps of Carrot General Insurance. It will be the first insurance company backed by a tech platform.
Kakao Pay officials said the company’s goal is to launch the insurance company within this year.
On the same day, the FSC was expected to decide on the first group of peer-to-peer companies to be approved under the new Act on Online Investment-Linked Financing and User Protection, promulgated in August last year. Currently, five companies are standing by the results, including People Fund, 8 Percent and Lendit.
“It’s been about several months since we waited for the FSC’s approval, and we’re looking forward to bringing innovation to the industry,” an official from a fintech company waiting for approval said.
By Park Ga-young (email@example.com