SEOUL, April 3 (Korea Bizwire) – Internet-only banks will promote innovation in South Korea’s financial sector that has been struggling with slower growth and slim margins, the financial regulator head said Monday.
Yim Jong-yong, chairman of the Financial Services Commission (FSC), made the remarks as one of two Internet banks, K-Bank, launched its operations earlier in the day. Another Internet bank, Kakao Bank, will begin operating in the first half of this year.
K-Bank is expected to “bring innovation, beyond competition, to the financial markets,” the senior official said.
Internet banks offer banking and other financial services without physical branch networks.
The government granted licenses to the two online banks to bring competition and deregulation to the financial sector.
To target Internet users in the 20-something to 40-something age bracket, K-Bank offers ordinary deposits, time deposits and card loans with more favorable interest rates than traditional banks, according to K-Bank officials.
Among the new services by the Internet banks are new credit assessments based on big data, wealth management by artificial intelligence systems and voice recognition banking services.
Helped by the new technologies, Yim said Internet banks will provide easier access to credit for employees in their 20s and owners of mom and pop stores.
K-Bank was formed by a consortium of KT Corp., Woori Bank and 19 other companies.
It was capitalized at 250 billion won (US$224.5 million) with some 200 employees and its headquarters located in the central Seoul district of Gwanghwamun.
K-Bank will be opened around the clock, allowing customers to get loans through a fingerprint identification service on their smartphone app.
At the launching ceremony, Shim Seong-hoon, head of K-Bank, said the Internet bank aims to lead an era of “banks everywhere,” which enables customers to receive banking and financial services regardless of time and place, and when they need them.
Kakao Bank, the Internet bank of Kakao Corp., South Korea’s dominant chat app, is expected to win a final regulatory approval this week, clearing the final hurdle for Kakao to launch the nation’s second Internet bank.
With a paid-in capitalization of 300 billion won, Korea Investment Holdings Co. holds a 58 percent stake in Kakao Bank.
Kakao, Kookmin Bank, Korea Post, Netmarble and Tencent Holdings Ltd. of China are among Kakao Bank’s shareholders.