With this, Kakao and KT will run Korea’s first Internet-only banks, Kakao Bank and K-Bank respectively, starting in June 2016
South Koreans can look forward to the country’s first Internet-only bank opening next June, said the Financial Services Commission (FSC), which approved two bids yesterday.
An Internet-only bank is one that allows people to conduct financial transactions online without needing to go to a physical location. This is not the same as a bank allowing its customers to use Internet or mobile banking services, but instead, it is a financial institution on its own.
Kakao, KT and Interpark were reported to be the three applications accepted by the FSC. However, since there were only one or two spots available, consistent with a previous report dated October 2015, Interpark’s bid to open I-Bank was rejected due to “a lack of stability in the loan business“, said the Yonhap News Agency.
One thing that may have influenced the FSC to give Kakao the license to run such a bank is its ties to tech companies that have successfully launched Internet banks outside South Korea. For example, it had partnered up with Tencent and eBay to bid for this license, given that Tencent started WeBank in 2014.
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KT was also said to have partnered with different companies from the “telecommunications, payments and retail” sector.
Kakao’s Kakao Bank and KT’s K-Bank will both start with 25 billion KRW (about US$21.6 million), which is said to be 10 per cent of the wealth owned by typical financial institutions in the market.
Online banks will be regulated differently. For example, the FSC has waived the need for real names in transactions on Kakao Bank and K-Bank, noting that Internet banks would not be able to verify identities like how a physical brick-and-mortar bank would.
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