Kakao Pay CEO Shin Won-keun talks during a press conference held at Conrad Seoul in Yeouido, Seoul on May 15. (Yonhap)
In a recent media event, Kakao Pay CEO Shin Won-keun unveiled the company’s ambitious goal of becoming a Korean version of Robinhood in its recent push for global expansion in partnership with Siebert Financial, the US brokerage firm.
“We are considering making a solution that combines Siebert's stock trading solution with Kakao Pay Securities' mobile trading service,” CEO Shin said. “We believe we can become the next Robinhood with it."
Robinhood is the red-hot US fintech startup that made a splash by introducing commission-free stock trading and investment services with no account minimums and fractional share trading. After expanding its user base of people in their 20s and 30s with commission-free services, the firm now generates revenue mainly through its paid premium service, Robinhood Gold, which offers access to features such as advanced market data and margin trading.
The Kakao Pay CEO showed confidence in securing a competitive edge in overseas markets, saying that its services have already been enhanced to meet the sophisticated demands of Korean investors.
He said the new solution co-developed by Siebert, could be sold to Southeast Asia and beyond through its local partners. After that, he added that the company aims to launch the service in North America not just for Korean users but also for local investors.
Kakao Pay’s vision for global expansion comes after it announced its intention last month to acquire up to a 51 percent stake in Siebert by next year with a total investment of some $77.38 million.
Earlier this month, the company purchased a 19.9 percent stake, while the remaining 31.1 percent will be acquired once approval is granted by both Siebert’s shareholders and US regulatory authorities.
Listed on the tech-heavy Nasdaq, Siebert Financial provides various brokerage and financial advisory services, including securities brokerage, investment advisory and insurance offerings. The US firm recorded a revenue of $50.1 million last year.
According to industry sources, Kakao Pay is increasing its stake in Siebert due to its well-established market position with an operating history of more than 55 years, among others, given that the Korean firm’s brand awareness in the global financial market is still low.
Aside from brand awareness, the acquisition is also expected to help Kakao Pay services secure pricing competitiveness.
“As short-term benefits, its tie-up with Siebert will help Kakao maintain lower fees than rivals in overseas markets. Based on its pricing competitiveness, it will be able to expand both its market share and profitability,” Lim Hee-yeon, an analyst at Shinhan Securities, said.
Kakao Pay’s brokerage arm boasts the industry’s lowest commission rate at 0.05 percent in Korea.
During the press event, the Kakao Pay CEO also hinted that the company plans to enhance user experience by offering 24-hour trading support for US stock trading. He predicted the service could help expand its market share as well.
The reactions of some analysts, however, were mixed over the costly deal between Kakao Pay and Siebert.
“We are conservative about the synergy,” said Kim Jae-woo, an analyst at Samsung Securities. “Considering the small business size of Siebert, its acquisition is expected to have a limited impact in achieving economies of scale,” he said, adding that the securities firm will continue to monitor the deal and take a cautious approach to gauge the firm’s market value.
In the meantime, an urgent issue for Kakao Pay at home is regaining the trust of its users following the unprecedented massive server shutdown of Kakao’s popular services in October last year. After two more service malfunctions in January, its stock trading system also suffered a service error last week.
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