However, when banks set up internet-only financial institutions and are the largest shareholder, they could be disadvantaged during the accreditation review.
The Financial Supervisory Service and Financial Services Commission has revealed a Q&A related to accreditation review when establishing an internet-only bank.
Firstly, financial authorities allow ICT (Information and Communications Technology) companies and platform operators to establish internet-only banks. They are also allowed to recruit customers through online/mobile channels, which are “the areas other than the essential parts of the commissioning regulations”.
This means that business areas other than opening a deposit account or judgment on loans will be granted to portal sites, e-commerce and telecommunications companies, allowing them to attract customers who want to make a deposit or get a loan.
Secondly, the authorities state that “it isn’t a must to use professional manpower when judging loan applicants”, and the essential part is to conduct a proper review. This means that loan appraisals can be executed through a computing system.
Thirdly, financial authorities made it clear that when banks or bank holding companies apply to set up an internet-only bank, they will receive disadvantages, considering the purpose of internet-only banks.
It is not possible for a subsidiary of a financial holding company to own an internet-only bank as an affiliated company. However, it is possible to hold shares, as long as it is not a majority position.
There is no requirement for the size of capital, but significant capital would be seen as a positive factor.
An internet-only company also requires a board of directors, an audit committee, a committee to recommend executives, and a risk management committee, just like an ordinary bank.
Applicants have to prepare operations before the final authorization, and must launch their business within six months of authorization.
By Francine Jung (firstname.lastname@example.org)