Internet banks will disburse points as ‘interest’ that customers can use on affiliated music or gaming websites and online shopping malls, and reduce the time and complexity of making a transaction. (image: KobizMedia/Korea Bizwire)
SEOUL, July 7 (Korea Bizwire) – “What is the use of interest rates if they are already too low? Aren’t you tired of entering long account numbers every time you transfer money?”
Kakao Bank, an Internet-only bank, held a presentation to discuss its business model and the future of its services on Wednesday, July 6, at its office in Pangyo, Gyeonggi Province.
One can deduce from the presenter’s questions above that Internet banks, which will start operating at the end of this year, have come up with a different strategy.
This strategy includes disbursing points as ‘interest’ that customers can use on affiliated music or gaming websites and online shopping malls, and reducing the time and complexity of making a transaction by removing the need to enter account numbers or go through a certification process.
Kakao Bank’s main strategy is to initiate a ‘simple wire transfer’ service that offers users the capability to easily send or receive money like messages. As KakaoTalk is dominating the mobile messaging world, Kakao Bank has high hopes for its new business.
Interest on deposits comes in all sorts of forms including cash, music or gaming website money, or shopping points – of which customers can freely choose. For instance, if monthly interest amounts to 20,000 won, a customer may receive 10,000 won in cash, 3,000 won as a KakaoTalk emoticon item, and 7,000 won for a music streaming service.
A ‘Kakao Universal Point’ system will also be created to facilitate the usage of digital ‘interest’, allowing customers to use points on KakaoGame, KakaoTaxi, KakaoDriver, music streaming site MelOn, and online shopping mall Auction.
Furthermore, based on data owned by Kakao Corp., Korea Investment Holdings, and KB Kookmin Bank, the Internet banks will implement a differentiated credit evaluation method to provide loans with reasonable interest rates for people with mediocre credit scores.
Simple loans targeting small business owners who operate businesses on online shopping websites Gmarket and Auction will also be provided. Their credit evaluation will be done using the accumulated data of their activities as eBay members.
Flexible repayment terms will be suggested to reflect the revenue and distinctive characteristics of products being sold.
Since there are no offline branches for customers to visit to talk to a representative, a ‘Kakao Finance-bot’ will be available to answer some questions that customers send through a messaging app.
Kakao Bank will request final authorization for its service at the end of this year, with the goal of launching early next year.
K Bank, on the other hand, is advertising itself as a ‘Comprehensive Mobile Bank’.
It plans on allowing users to open a bank account within 10 minutes, and offering customers a full range of financial services through a mobile app including making deposits and transfers. Even asset management services will be available through the app.
K Bank has prioritized establishing a ‘Perfect Non Face-to-Face Transaction System’.
Though K Bank does not have a well-established platform like KakaoTalk, it is focusing on a fast and convenient wire transfer service with a simple certification requirement such as cell phone, email, or text messaging.
K Bank is also preparing to offer loans at interest rates around 10 percent by adding payment history data from BC Credit Card Company and KT Telecom to its credit information database.
Savings programs with ‘digital interest’ where points can be used across many different affiliated service providers, similar to that of Kakao Bank, will also be offered.
“Competing against existing banks on low-interest rate products and low service charges can only go so far. Web-only banks must come up with creative ways to attract customers by linking with other industries,” said Park Kyung-hoon, director of K Bank.
By Nonnie Kim (nkim@koreabizwire.com)
