Korean app-based banking market may be joined by heavyweight financial names

[Photo by Lee Chung-woo]

App-based banking market in South Korea currently with just two players is expected to bulk up as financial conglomerates are campaigning to jump in.

The Korea Federation of Banks on Tuesday has submitted a collective letter of opinion on behalf of financial holding companies expressing wishes to start own internet-only service with the Financial Services Commission (FSC).

“If financial authorities permit internet bank operations to financial holding groups and banks, digital transition and innovation could be amplified in the financial sector,” said a source who attended the meeting.

Financial majors with businesses ranging from traditional loan to investment banking could act to service more tailored and differentiated services to their customers in cooperation with retail, communications and delivery platforms, he added.

Four majors – KB, Shinhan, Hana and Woori – are interested in adding an online bank unit to better respond to rapid changes in the market.

[Graphics by Song Ji-yoon]

The financial authority is said to be positively reviewing the option of allowing heavyweights into the market.

There are just two players – K-Bank and Kakao Bank – in Korea. The country’s third online-only bank Toss Bank, which was given the green light to operate at the end of 2019, is expected to be launched within this year. The country’s major commercial lenders own stakes in the three online-only banks through equity investments.

Outside Korea, various types of online-only banks are in operation under financial holding entities or commercial banks. France’s BNP Paribas runs Hello Bank in Europe, and PayPay Bank under Sumitomo Mitsui Banking Corp. is gaining ground in Japan with special loan service launched in partnership with online shopping malls.

In the United States, Marcus by Goldman Sachs is expanding online savings and loan services with relatively low initial deposit requirements.

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