KakaoBank, South Korea's largest internet-only bank, is seeking to obtain a virtual bank license in Thailand by partnering with a leading financial group in the country, making its first move after announcing its plan for business expansion into Southeast Asian economies.

The Korean digital lender announced on Friday that it has signed a memorandum of understanding with SCBX, Thailand's financial technology group, to obtain a license to run a digital banking platform from the central bank of Thailand.

The term “virtual bank” in Thailand refers to a branchless and digitized bank, similar to internet-only banks in Korea.

"We are delighted to introduce KakaoBank's mobile banking expertise to the global market. Together with SCBX, KakaoBank is committed to shaping the future of finance and contributing to the advancement of financial technology in Thailand," Yun Ho-young, CEO of KakaoBank, said.

"This strategic partnership will create opportunities for Thai customers, particularly those who are underserved, to conveniently access a wide range of financial products and services with enhanced accessibility through technology," Arthid Nanthawithaya, CEO of SCBX, added.

SCBX, a major financial holdings company, comprises Siam Commercial Bank (a leading commercial bank in Thailand), Card X (a credit card services company), InnovestX Securities (a financial and investment services company), among others.

The memorandum was inked after Thailand's central bank issued a consultation paper on the licensing framework for allowing digital banks to compete in the market in January.

According to the framework, the Bank of Thailand aims to accept authorization applications for internet banks and grant licenses to a maximum of three companies by 2024. These licensed firms will be the country's first digital banks and will be able to commence operations in Thailand by the end of June of 2025.

As the two companies’ initial joint project, KakaoBank and SCBX will form a virtual bank consortium to acquire an internet-only bank license. KakaoBank aims to acquire a minimum of 20 percent of shares, after its establishment.

If the consortium successfully acquires the license, KakaoBank will be the first among the three internet-only banks in Korea -- KakaoBank, K bank, and Toss Bank -- to venture into international expansion, as none of them has expanded outside of Korea thus far.

The memorandum is a part of KakaoBank's global expansion strategy, which has been pushed for since its initial public offering in 2021. KakaoBank CEO Yun, who spearheaded the creation of the internet-only bank within IT giant Kakao, expressed his desire to expand the bank's services beyond Korea at that time.

A portion of the funds raised from the IPO, approximately 50 billion won ($39.14 million), has been allocated for entering overseas markets.

Following securing his fourth two-year term in March, Yun also announced that KakaoBank is actively reviewing global expansion, particularly targeting the Southeast Asian market.

"We are currently engaged in discussions with two Southeast Asian countries. We anticipate being able to announce concrete progress from one of these discussions by the end of this year," Yun said during a press conference held in Seoul in April.

In addition to Thailand, industry insiders consider Indonesia a highly promising candidate for KakaoBank's global expansion.