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By Lee Kyung-min
Competition for a third internet-only bank is becoming fiercer among Korea's financial groups after a consortium led by Hana Financial Group declared a bid Tuesday to seek preliminary approval from financial authorities.
The shared interest among the financial groups reflects a growing need to achieve innovation as part of a broader strategy towards digital transformation.
For the bidding, Hana, the nation's fourth-largest financial group by total assets, formed a consortium with SK Telecom, the country's largest mobile carrier, and Kiwoom Securities, an online brokerage services provider.
"We have begun our efforts to file for a preliminary approval with the financial authorities on a shared vision that setting up an ICT-based entity will help us take the initiative in becoming a leading digital company and accelerate digital transformation," the group said in a statement.
The group added the consortium will seek to build partnerships in the coming months with promising business entities including IT firms, fintechs and financial services providers.
The consortium will also involve Finnq, a mobile-based financial service provider launched with a 51-49 investment from Hana Financial and SKT.
Finding an ICT firm that can be the largest shareholder will be a major challenge for Hana.
The relationship will focus on creating a "convergence" between traditional financial services and IT sector, thereby creating an optimal business model to best serve tech-savvy customers with high standards, the group added.
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The latest bid by the group that recorded a net profit of 2.24 trillion won ($198 billion) in 2018 makes the competition fiercer among the nation's major financial groups seeking to become Korea's third operator of internet-only banks.
The existing two are Kakao Bank, operated by mobile messaging service provider Kakao Corp., and K bank, operated by telecommunications firm KT.
Shinhan Financial Group said Feb. 11 that it will form a consortium with Viva Republica, the operator of Toss, a popular mobile transfer app, to enter the race.
KB Financial has a 10 percent stake in Kakao Bank, established by the Korea Investment Holding and Kakao Corp.
Woori Financial has a 13.79 percent stake in K bank, established by KT, the second-largest mobile carrier.
NongHyup Financial is the only group that has yet to make an official bid to enter the race, with only speculations circulating that it is in talks with firms to seek a consortium.
The Financial Services Commission (FSC) will receive an application letter for the third internet-only bank between Feb. 27 and 28.
The FSC will announce shortlisted firms in May and grant a license to up to two consortiums later.
A new internet-only bank is scheduled to begin operation in the first half of 2020.
