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| The Financial Services Commission headquarters / Yonhap |
The Financial Services Commission (FSC) is receiving preliminary applications for the nation's third internet-only bank until Oct. 15, but consortiums for the bid are experiencing difficulties in securing partners with solid cash reserves.
Kiwoom and Toss, which financial authorities rejected in their bids for an internet-only bank in May, are seeking a commercial bank's participation in their consortiums, but banks have been lukewarm in joining them, sources said Friday.
Existing internet-only banks ― K bank and Kakao Bank ― have commercial banks as their major stakeholders. KB Kookmin Bank is one of Kakao Bank's largest shareholders while Woori Bank is the K bank's largest stakeholder.
However, banks seemed reluctant to join a partnership for a new internet-only bank this time.
Rumors said Standard Chartered (SC) Bank Korea is interested in joining hands with Toss' consortium in its race for an internet-only bank, but an SC Bank Korea official denied the allegations.
"I do not know the source of the rumors, but they are entirely untrue," the official said.
Even a Viva Republica official said it has yet to decide on whether it will submit its preliminary application with the FSC for a new internet-only bank.
Viva Republica is the operator of the financial platform Toss. The firm led Toss consortium in its last bid for an internet-only bank in May.
"We haven't decided whether to submit our preliminary application with financial authorities. Hurdles still seem too high," said the official.
KEB Hana Bank had joined hands with Kiwoom consortium in the May bid, but showed reservations about joining the consortium this time.
"There are not many reasons for commercial banks to join the race for a new internet-only bank this time," said a commercial bank official who asked not to be named.
"K bank and Kakao Bank managed to draw attention from customers with their new financial services. Then, domestic commercial banks also introduced a series of similar financial products while strengthening their online and mobile service platforms. Their services are now similar to each other."
Viva Republica officially expressed its complaints last month about financial authorities' excessive regulations on firms seeking establishing an internet-only bank.
"We have long prepared to launch a securities business. But the financial authorities keep coming up with impossible tasks for us," Viva Republica founder Lee Seung-gun said during a media conference at a recent fintech event. The event was also attended by FSC Chairman Eun Sung-soo.
The nation's largest portal Naver is seeking to establish an internet-only bank in other Asian countries through its subsidiary LINE, a global mobile platform operator based in Japan.
In August, LINE announced that LINE Bank Preparatory Office, a consortium comprised of LINE Financial Taiwan, Taipei Fubon Bank, CTBC Bank, FarEasTone, Standard Chartered Bank, Taiwan Mobile, and Union Bank of Taiwan was granted an internet banking license by Taiwan's Financial Supervisory Commission.
LINE also plans to open internet-only banks in Japan, Thailand and Indonesia.
