SEOUL, Nov. 3 (Korea Bizwire) — The head of Kakao Bank, South Korea’s second Internet-only bank, expressed concern Friday that restrictions on ownership of a financial firm by a non-financial company could undermine innovation in the country’s banking sector.
“The pace of innovation could slow down unless the restrictions are eased,” Yun Ho-young, one of the bank’s two co-CEOs, said in a news conference in Seoul marking the first 100th day anniversary of the lender starting operations.
Kakao Bank, led by Kakao Corp., operator of South Korea’s dominant messaging app KakaoTalk, has gained popularity among mobile-savvy customers, attracting more than 4.35 million accounts as of the end of October, just three months after it was launched.
Kakao Bank attracted deposits worth 4.02 trillion won (US$3.6 billion million) and extended loans worth 3.39 trillion won.
Still, Yun suggested that the banking regulations could stand in the way of innovation in the Internet-only banks, especially in raising capital.
The lender launched in late July with paid-in capital of 300 billion won, increased its capital by 500 billion won in September in a move that could bolster its lending business.
Under the current laws, a non-financial firm is prohibited from holding more than a 4-percent stake in a bank to keep lenders from being used as private vaults for family-run business conglomerates, or chaebol.
Kakao Bank and its local rival K-Bank started offering services earlier this year and are credited with fueling competition in the local banking sector that had been controlled by brick-and-mortar banks in the past.
The Internet-only banks are open around the clock and all of their services can be done without face-to-face contact with customers and without bank branches. This is a great convenience to many ordinary people who just don’t have the time to visit lenders during work hours.