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KT, Kakao become the first Internet-only banks in Korea

Posted November. 30, 2015 08:48,   


“K-Bank (tentative name)” of KT Corp. and “Kakao Bank (tentative)” of Kakao Corp. have won a license for Internet-only bank. Based on a review by external evaluation committee over the weekend, the financial regulator held on Sunday a provisional financial committee, granting a preliminary license to the two consortiums.

When the two begin their operation from the second half of 2016 with the final authorization, a new-mode of bank will be introduced in 24 years since 1992 when Pyongwha Bank (later merged into Woori Bank) was established in Korea. Interpark-led “I-Bank” went out of the evaluation this time.

An Internet-only bank is a bank where financial transactions for savings and installment saving, loans, payment and settlement are made through online or mobile environment without brick-and-motor stores. Having been generalized in foreign nations such as America, Japan and Europe, the bank is the first of its kind in Korea.

Having changed the related regulation in a way that allows the banks to identify customers’ real name on a non-face-to-face setting, the government pushed ahead with the preliminary licensing procedure. When a revised bill that allows Information and Communication Technology companies to own Internet-only banks’ shares by up to 50 percent is passed at the National Assembly, the government plans to grant the license.

Once the Internet-only banks open their doors next year, it is expected that reduced cost from not having to build physical stores and transaction costs would introduce more loan products with mid interest rates of 10 percent for working-class people. There would also be newly-introduced financial services based on information technology such as big data, all of which would contribute to fostering innovation in financial sector.

“The two bidders are required to come up with measures to prevent hackings for safe non-facial transaction as well as specific ways to protect financial consumers such as building customers’ centers,” said Financial Services Commission Chairman Yim Jong-yong.