Korea's first online-only K Bank begins operation on April 3

South Korea’s first digital bank K Bank starts business on April 3 on limited basis as current regulations bars the company of securing additional capital.

K Bank will start off banking service without any brick-and-mortar presence from next week, slightly later than originally planned as the bureaucratic, political, and financial sector had been preoccupied with the impeachment trial and bailout of shipbuilding major Daewoo Shipbuilding & Marine Engineering.

What would be its only rival Kakao Bank, led by messaging app operator Kakao Corp. in consortium with a number of financial institutions, will follow suit before June upon gaining green light from authorities next month.

Because they can save cost through online-only service, the Internet banks can be more appealing to customers in commission and interest rate charges.

K Bank will allow banking transmission purely on phone number of the other party and overdraft through simple finger-print recognition.

But banking services by online banks would be restricted in the fledgling stage due to regulation. Under the current banking law, a non-financial institution cannot hold more than 10 percent in a bank. KT, a shareholder in the bank, therefore cannot up capital in the bank.

Bills setting exceptions to the banking law to allow an ICT enterprise to own up to 50 percent in an online bank are pending at the legislative. They will only draw attention from the legislative after political scene regains stability following the May 9 presidential election.

[ⓒ Maeil Business Newspaper & mk.co.kr, All rights reserved]