Kakao Bank, the mobile bank of Kakao Corp., won its final regulatory approval Wednesday.
The Financial Services Commission held a meeting Wednesday and gave the green light to Kakao Bank to operate as an internet bank that provides banking and financial services without any physical branch network.
With the final regulatory hurdle cleared, the bank will begin its services as early as June after final checks and preparation, the company said.
Lee Yong-woo (center) and Yun Ho-young (right), co-CEOs of KakaoBank of Korea, pose with Kim Hak-soo, director general of the banking and insurance bureau of the Financial Services Commission on Wednesday after receiving a banking license. (FSC)
“At the beginning we will provide basic banking services such as deposits, loans and check cards but we will expand our services to other areas like credit cards and innovative services,” Yun Ho-young, co-CEO of Kakao Bank told reporters on Wednesday.
Kakao Bank is the second internet-based bank in South Korea. On Monday, K bank, the first such bank backed by a consortium of KT Corp., Woori Bank and 19 other companies, was officially launched.
At the launch event Monday, K bank CEO Shim Sung-hoon said K bank and Kakao Bank will not be competitors but market pioneers, each separately looking for a niche market in finance.
But the two banks are likely to compete with each other through different strategies.
Both banks vow to offer higher interest rates for depositors and lower interest rates for marginalized borrowers based on new credit analysis through big data. They will offer interest in the form of digital credit and gifts.
“What differentiates kakaobank from K bank is that we have overseas remittance services,” Yun said. “We aim to offer low fees for overseas remittance services -- as low as one-tenth of what traditional banks offer.”
Kakao Bank said the bank will be mobile-only while K bank operates both on the internet and mobile devices.
Kakao Bank will utilize its parent company’s strong presence in mobile chat app KakaoTalk which has dominant status here with 420 million users.
Yun said instead of integrating into the messenger app, which is operated by a separate unit, the bank will link services in order to use the network of the country’s No. 1 mobile chat app. The users of the mobile bank will be able to transfer money and get loans via KakaoTalk, the bank said.
The mobile bank with a paid-in capitalization of 300 billion won ($269.8 million), aims to turn profit in three years, the bank’s co-CEO Lee Yong-woo said.
Korea Investment Holdings Co. holds a 58 percent stake in Kakao Bank. Kookmin Bank and Kakao each hold 10 percent. Other shareholders include Korea Post, Netmarble and Tencent Holdings of China.
Meanwhile, K bank said it will cooperate with 3,000 offline KT stores and 10,000 GS convenience stores to attract elderly people who are not familiar with mobile devices.
By Park Ga-young (email@example.com