SEOUL, Jul. 26 (Korea Bizwire) — South Korea’s second Internet-only bank, Kakao Bank, is set to begin operations Thursday, in the latest move by the government to reinvigorate the nation’s banking sector suffering from weaker growth.
The planned launch of Kakao Bank, led by Kakao Corp., operator of Korea’s dominant messaging app KakaoTalk, came after the first Internet-only bank, K-Bank, gained wide consumer appeal.
Consumers can open an account at Kakao Bank by downloading an app and verifying their personal information through the Internet.
Following in the footsteps of K-Bank, Kakao Bank will offer ordinary deposits, time deposits and card loans with more favorable interest rates than the ones offered by traditional lenders, bank officials said.
Kakao Bank will also significantly cut commission fees when customers send money overseas.
As for nine major currencies, including the U.S. dollar, the euro and the Japanese yen, Kakao Bank will charge 5,000 won (US$4.46) per international money transfer worth below US$5,000.
If the value of an international money transfer exceeds $5,000, the commission fee will be set at 10,000 won, or about one-tenth of the fees charged by traditional banks, Kakao Bank said.
With a paid-in capitalization of 300 billion won, Korea Investment Holdings Co. and Kakao hold a 58-percent and 10-percent stake in Kakao Bank each.
Kakao’s consortium also includes Kookmin Bank, eBay Inc. and China’s Tencent Holdings Ltd.
Although Kakao Bank will focus on expanding online banking services in its initial stage, bank officials have said they will eventually launch a so-called “app-to-app” payment service.
The payment service allows a user to pay for purchases without using the financial network of credit-card firms, bank officials said.
Instead, it will enable a user to pay for purchases with Kakao Bank’s app, helping retailers save on commission fees charged by credit card companies and giving buyers more financial benefits.