Subscribe
E-Paper
 |
| From left are Dunamu CEO Lee Sirgoo and K bank CEO Suh Ho-sung / Yonhap |
By Lee Min-hyung
Dunamu's plan to acquire a stake in Woori Financial Group comes as the top challenging factor to K bank, which runs the risk of losing its partnership with Dunamu, the operator of Upbit, one of the nation's major cryptocurrency exchanges.
K bank has been working closely with Dunamu by offering real-name bank accounts for Upbit users. Crypto exchanges in Korea are mandated to form such a partnership with a commercial bank in order to operate Korean won trading services.
K bank was the top beneficiary from its partnership with Dunamu in terms of profit growth and broadening its client base. The mobile lender is set to see a turnaround this year after reporting operating losses since its launch in 2017. From the customer standpoint, K bank attracted 2.2 million customers as of the end of last year, and the figure increased to 6.6 million at the end of September this year.
The lender is also enhancing its profitability as its user base expands. K bank reported a 16.8 billion won net profit for the third quarter. The total figure for the first three quarters combined reached 8.4 billion won. The outlook for its fourth-quarter earnings also remains promising due to interest rate hikes and the growing number of users.
A win-win between Dunamu and Woori?
But with Dunamu recently joining the race to take over a 10 percent stake in Woori, some market watchers are suggesting that the Upbit operator suspend its partnership with K bank and form a new alliance with Woori Bank for its crypto-trading platform. The stake is valued at around 1 trillion won ($847.8 million).
For Dunamu, acquiring a stake in Woori Financial is one of the best measures it can do to hedge client-related risks, as it could establish a new partnership with Woori Bank. Local crypto operators must renew their contracts with affiliated banks each year to operate crypto-trading services available with Korea's local currency.
If Dunamu acquires a stake in Woori, Upbit will be able to operate its trading platform with diminished risks based on its partnership with the bank.
From Woori's viewpoint, the commercial bank can also seek new business opportunities through the partnership, as it has not yet signed a contract with any of the crypto exchanges here. This is not the case for Woori's rival lenders ― such as Shinhan and NongHyup Bank ― which have already formed ties with other exchanges, specifically Korbit and Coinone.
Woori Bank has so far been maintaining a "wait-and-see attitude" on widening its influence in the crypto industry. But with the market growing at a rapid pace this year, more and more financial firms here and abroad are looking for new revenue sources by making direct or indirect investments in the emerging market.
 |
"Given the conservative corporate culture of banks, only some of them have remained agile in responding to the financial paradigm shift led by the cryptocurrency, but more lenders are expected to jump into the market in the end due to a series of benefits, such as marketing effects and commission revenues," an industry source said.
According to data from Upbit, the exchange achieved triple growth in only about a year. The number of its users surged to more than 8.9 million as of the end of October from around 3 million a year ago. This figure was driven by the crypto investment boom led by the young generation, particularly those in their 20s and 30s.
A group of potential bidders, including leading telecom company KT, Korea Investment Holdings and Dunamu, are vying to acquire the 15.25 percent stake held by the state-run Korea Deposit Insurance Corporation in the financial holding company.
