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K bank ups ante with non-face-to-face mortgage service

Aug. 4, 2020 - 16:52 By Kim Young-won
Lee Moon-hwan, CEO of internet-only bank K Bank, speaks about a new mortgage service and the firm’s busniess partnerships at a press conference on Tuesday in Seoul.( K bank)

In its first step since resuming operations, internet-only lender K bank unveiled a mobile mortgage loan service on Tuesday, allowing customers to borrow money without visiting brick-and-mortar banking branches.

Utilizing data scraping technology to gather customers’ credit information online, the bank can easily calculate loan limits and interest rates for customers, officials said. It has also reduced the number of documents needed when taking mortgage loans -- the bank only requires image files of a document for proof of income, a certificate of property registration and a property registration number, they added.

The interest rate of the mortgage product is set at a minimum rate of 1.63 percent a year.

If a customer transfers a mortgage contract to K bank, he or she can borrow up to 500 million won ($419,000), while a life stability loan of up to 100 million won is offered with apartment ownership as collateral. The service is likely to start within this month, the CEO said.

“Loan services are at the core of banking services, but two internet-only banks hold a combined 2 percent of the market share,” said Lee Moon-hwan, CEO of the online-only K Bank. “Rather than competing against each other, I believe now is the time for internet-only banks to work together to expand the market share.”

When taking loans for purchasing a home in Korea, a customer usually needs to visit a community service center or a bank at least once or twice to prepare necessary documents.

From application to approval, it takes only two days via K bank to get mortgage loans compared to weeks at conventional banks, the bank said.

After a monthslong operational hiatus due mainly to regulatory hurdles to raise capital, K bank resumed its businesses in earnest in July.

It completed a fundraising scheme worth 400 billion won and rolled out new savings account and loan services last month. The savings deposits at the bank increased by 480 billion won from the previous month while the entirety of loan balances reached 170 billion won just 15 days after the three loan services were launched last month.

The CEO also pinned hopes on additional capital increases, saying that the capital of the bank should be around 1.4 trillion-1.5 trillion won for a smooth operation. He expects to see the company turning a profit in 2022 at the earliest.

K bank also announced that it will beef up collaboration with its largest stakeholder, card processing firm BC Card, as well as telecom giant KT, saying its access to the networking company’s platform differentiates services provided by Kakao Bank, the online banking leader here. KT owns BC Card, which holds 34 percent of the online bank.

K bank, for example, plans to offer rewards for KT’s mobile subscribers who pay their bills via K bank’s accounts or via debit card. It will also utilize KT’s 2,500 smartphone sales branches across the nation to promote the bank’s services.

Working with financial technology startup Settle Bank, it will launch a virtual bank account service that allows customers to use their personal cellphone numbers as bank account numbers.

K bank is the nation’s first online bank, established in 2016.

By Kim Young-won (