SEOUL, Nov. 30 (Korea Bizwire) - Kakao Bank, an Internet-only bank consortium led by Kakao Corp., said Monday that it is planning to begin operations in the second half of next year to lead the unprecedented market by making use of its millions of mobile chat application users.
Along with the K-Bank team headed by KT Corp., South Korea’s largest fixed-wire provider, Kakao Bank won a preliminary license to launch the country’s first direct banks on Sunday.
The bidders are required to apply for official approval from the Financial Services Commission (FSC) before June next year and to begin operation within six months after the FSC endorsement.
Led by Kakao, the operator of No. 1 mobile chat application Kakao Talk, 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.
“We have to establish a computation network system to apply for FSC approval. It will take time,” Lee Yong-woo, managing director of Korea Investment Holdings, said in a press briefing.
“It will likely cost about 100 billion won (US$86.5 billion) to set up the network. We expect to break even after three years.”
He said Kakao Bank will take advantage of Kakao Talk, which has 38 million members in a country of a 50 million people, reducing transaction expenses and marketing costs.
The Kakao Talk platform will help customers receive faster and cheaper customer services, such as free application downloads and direct mobile brochures, with lower interest rates on loans.
Kakao now runs mobile payment tools such as Kakao Pay and Bank Wallet Kakao.’
KT-led K-Bank, involving No. 2 lender Woori Bank, GS Retail Co. and Hyundai Securities Co., is aiming to swing to a profit within three years and hit the break-even point in six years.
It said it will utilize some 23,000 automatic teller machines (ATMs) in Woori Bank and GS Retail’s convenience stores to offer offline direct banking services to its online customers.
It also has a plan to switch KT’s 70,000 public phone booths across the nation to ATMs.
“Internet banks have an advantage over local banks in cost-saving efficiencies, but have less channels to contact customers in person,” said Kim In-hoe, senior managing director of KT.
“It’s easy to change phone booths to ATMs as they are already equipped with power lines and an Internet network.”
He said K-Bank is expected to open late next year after completing the construction of the network system.