The country’s Financial Services Commission said Sunday it awarded a preliminary license to Kakao for a business to be named Kakao Bank.
“An Internet bank is meant to give non-financial players, including IT firms, chances to enter the banking sector if they have feasible business plans to improve the financial market and customer rights”, the FSC said earlier’.
Kakao Bank and K Bank will individually apply for the final approval after satisfying the human and material requirements.
For Kakao Bank, Korea Investment Holdings Co. will take part as a major shareholder with 50 percent share, while Kakao and Kookmin Bank own 10 percent share each.
Kakao, KT and Interpark were reported to be the three applications accepted by the FSC. It is the first time in 23 years that a new commercial bank has opened in the country’s banking industry. Once they receive the official approval form the FSC, they need to start operation within six months.
According to the agency, Kakao’s Kakao Bank gained high scores for innovative services based on its immensely popular mobile messenger app KakaoTalk with 40 million users.
The banks holding a stake in the two winning consortiums, on the other hand, rejoiced at the FSC approval, but are also facing financial burdens, as well as possible power struggles within the consortium.
Currently, top-tier banks offer an annual rate of 3 percent to 5 percent, while secondary financial institutions, such as mutual savings banks or capital services, charge 15 to 34 percent.
“Kakao’s rival, the K-Bank consortium, includes South Korea’s second-largest mobile carrier KT, Woori Bank, GS Retail and China’s Alipay, which is affiliated with e-commerce company Alibaba”.
Nonparticipating banks geared up to expand their online banking platforms and increase their range of mid-interest rate loans to defend against the incoming Internet-only banks.
FSC Chairman Yim Jong-yong has been a strong advocate for the web-based bank, saying he expects the online-banking industry to raise the competitiveness of the Korean banking industry as a whole. However, many difficulties are expected in order to pass the bill.
The bank also aims to go global as it has secured ties with Tencent, China’s biggest social-networking and mobile games company, and the USA online retail giant eBay, which also owns Korea’s two leading shopping sites Gmarket and Auction.