(Image: Kobiz Media)
SEOUL, March 17 (Korea Bizwire) — As a bank run carried out from smartphones has been identified as one of the factors behind the rapid downfall of Silicon Valley Bank, which collapsed in just 36 hours, concerns are growing that South Korea’s online lenders could also fall prey to a fast-moving bank run.
Under the regulations for electronic financial transactions, the maximum transfer limit at domestic banks for Internet and mobile banking is set at 100 million won (US$76,580) for individual customers, and the maximum daily transfer limit is set at 500 million won.
Internet-only banks, which rely on non-face-to-face channels for sales operations, have an user interface that makes transfers quick and easy.
Without offline branches, they tend to respond to consumers mainly through non-face-to-face call centers.
Easy financial transactions through non-face-to-face channels could be one of their strengths, but they could also serve as a double-edged sword by amplifying their vulnerability in case of emergency.
Rep. Kim Byung-wook of the Democratic Party said during the party meeting held on Tuesday that in case of emergency, the structure of the online lenders characterized by smartphones and Internet banking is highly vulnerable to a massive bank run within a short period of time.
Financial authorities, however, dismissed the possibility that the collapse of SVB could have a significant impact on domestic Internet banks.
“Unlike SVB, for which a large amount of deposits were held by a handful of depositors, domestic Internet-only bank deposits have the difference of being dispersed among individuals with relatively small balances,” said an official at the Financial Supervisory Service.
J. S. Shin (js_shin@koreabizwire.com)
