Shinhan, KB, NongHyup may be allowed to open internet-only banks - The Korea Times
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Shinhan, KB, NongHyup may be allowed to open internet-only banks

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By Park Jae-hyuk

The financial authorities will review the banking groups' plans to establish their own internet-only banks as early as July, after completing an assessment of the domestic banking industry's competitiveness in preparation for Viva Republica opening Toss Bank.

"Based on the assessment, we will discuss whether to issue additional internet-only bank licenses and allow financial holding companies to establish their own internet-only banks," a Financial Services Commission official said.

This remark came as several banking groups started preparing the procedures to ask regulators to enable the opening of their own app-based banks. Only tech firms have been allowed so far, with Kakao running Kakao Bank, KT operating K bank and Viva Republica preparing to launch Toss Bank.

Financial holding companies have participated in investments in those banks through their banking units. Woori Bank is the second-largest shareholder of K bank, while KB Kookmin Bank is the third-largest shareholder of Kakao Bank. Hana Bank is among the shareholders of Toss Bank.

Korea Federation of Banks (KFB) Chairman Kim Gwang-soo, however, has emphasized that local banking groups should be allowed to open their own internet-only banks in order to participate in the changing industry trend.

Amid the increase in non-face-to-face financial transactions over the past few years, conventional banks have been under severe threat from tech firms entering the financial industry. The valuation of Kakao Bank, for example, is estimated at up to 10 trillion won ($9 billion), which is similar to those of leading banking groups.

From that standpoint, the KFB surveyed financial holding companies last month, regarding the companies' needs for having their own internet-only banks. The lobby group will make a proposal to the financial authorities within this month.

"The proposal is intended to explain the necessity of internet-only banks owned by financial holding companies, so as to give more options to consumers," a KFB official said.

At this moment, Shinhan, KB and NongHyup financial groups are mentioned as the three financial holding companies that want to establish their own internet-only banks, although they have yet to disclose their blueprints.

They will likely seek to open their internet-only banks after establishing separate entities, considering that the "Act on Special Cases Concerning the Establishment and Operation of Internet-Only Banks" does not allow financial companies to become the largest shareholders of internet-only banks.


Park Jae-hyuk pjh@koreatimes.co.kr


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