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(LEAD) Kakao, KT win licenses for first Internet bank

2015/11/29 16:59

(ATTN: ADDS more info from 4th para; ADDS byline)

By Kim Boram

SEOUL, Nov. 29 (Yonhap) -- Consortiums led by information technology service giants Kakao Corp. and KT Corp. won a preliminary license to launch South Korea's first Internet-only bank Sunday, the financial regulator said, opening the new business market in the long-slumping banking industry.

The Financial Services Commission (FSC) said it gave approval to Kakao Bank and K-Bank after a two-month review of their qualifications, including their financial stability, shareholdings structure and customer service plan. It had accepted applications from three bidders, including I-Bank led by online shopping mall operator Interpark Corp. on Oct. 1.

An Internet-only bank, or a direct bank, is a bank that offers financial services online without brick-and-mortar locations. Such banking emerged in the 1990s with the advent of online banking technology.

A newly established online bank will start with 25 billion won (US$21.6 million) in capital, a tenth of the capital for an existing commercial lender.

The two bidders are required to set up a management structure and risk management system in accordance with related laws and map up detailed plans to protect consumer rights and prevent computation security breaches before applying for official approval from the FSC.

The FSC said it expects the country's first-ever direct bank to start operation within June next year.

Led by Kakao, the operator of No. 1 mobile chat application KakaoTalk, Kakao Bank is teaming up with 11 companies including Kookmin Bank, the third-biggest lender by asset; Netmarble Inc., an online game software provider; eBay Korea Co. and Korea Investment Holdings Co.

The FSC said Kakao Bank has an innovative business plan with broader customer lists based on KakaoTalk, which has more than 34 million members.

Kakao is already running mobile payment tools such as KakaoPay and BankWalletKakao.

K-Bank is initiated by KT, the largest fixed-wire operator. Its partners involve No. 1 bank Woori Bank, leading IT solution provider Nautilus Hyosung Inc., GS Retail Co. and Hyundai Securities Co.

K-Bank and its partners have a number of channels to contact customers and its credit assessment model with big data analysis can give appropriate loans to lower credit borrowers, according to the FSC.

The I-Bank consortium, along with SK Telecom Co., the largest mobile carrier; GS Home Shopping Inc. and the Industrial Bank of Korea, failed to grab a license due to a lack of stability in loan business, the FSC added.

Over the last few years, the FSC has tried to introduce the direct banking business as part of its efforts to deregulate the local financial industry and foster the fast-growing financial technology sector.

It lifted real-name financial transaction regulations for online banks as it had been impossible for Internet-based banks to identify the real name of an individual who opens an account in person.

An ownership regulation that keeps an industrial company from holding more than a 4-percent stake in a bank will also be eased in the near future.

The FSC is considering raising the stake ceiling to about 50 percent to encourage IT firms to bring more money into the sector.

"We expect the new Internet banks to offer improved, cheaper banking services to customers and extend loans to borrowers with lower credit ratings," said Doh Kyu-sang, director general of the Banking and Insurance Bureau at the FSC.

"They also stir up fresh competition in the banking industry and create more job opportunities."

   brk@yna.co.kr

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