The financial district of Yeouido in Seoul. (Yonhap)
SEOUL, Sept. 3 (Korea Bizwire) — South Korea’s major financial holding firms that control large-sized commercial banks are asking financial authorities to grant them Internet bank licenses as a way to cope with competition from Kakao Bank and K-Bank.
The four entities – KB Financial Group Inc., Shinhan Financial Group Co., Woori Financial Group Inc. and Hana Financial Group Inc. — delivered such opinions to the Financial Services Commission in May, according to industry sources.
Such a move is based on their judgment that it will be difficult to compete with strong platform-based Internet banks simply by upgrading their mobile apps.
They claimed that commercial banks, in general, have more than 10,000 employees and 800 branches across the country, and are therefore disadvantaged in competition against Internet banks that have lower fixed costs.
Another factor behind the request is that it is difficult to promote digital transformation for the current bank organization structure that has grown like a dinosaur.
The number of Kakao Bank app’s monthly users reached 13.04 million in June, far exceeding KB Kookmin Bank’s 10.3 million and Shinhan Bank’s 8.89 million, according to statistics from the big data analysis platform Mobile Index.
There is potential that the financial holding companies’ push could face resistance from internal stakeholders.
If they are allowed to operate Internet banks as subsidiaries, their Internet banks could compete with their existing subsidiaries, i.e., commercial banks. If one gets bigger, chances are high that the other could contract.
J. S. Shin (js_shin@koreabizwire.com)
