South Korea’s financial regulator has given preliminary approval to two consortiums ― led by mobile messaging firm Kakao and mobile operator KT ― to set up online-only banks with no physical branches.
Kakao Bank and K-Bank will be the first new commercial banks to be set up in the country in 23 years, the Korea Herald said.
The Kakao-backed group is supported by 11 partners, including Tencent, eBay, Korea Investment & Securities, Kookmin Bank and Loen Entertainment. It plans to invest KRW700 billion ($606 million) over the next three years and start services next year once it has received final approval from the Financial Services Commission, Reuters reported.
Two months ago Tencent and eBay reportedly planned to invest an undisclosed amount in the banking venture through subsidiaries.
Meanwhile K-Bank has 21 partners, including Alibaba’s Alipay, Woori Bank and Hyundai Securities. The group will start with a KRW250 billion investment.
The Herald quoted Yoon Ho-young, Kakao Bank’s VP of mobile banking, as saying: “We hope to serve as a catalyst to revitalise and change the Korean banking industry.”
The bank can leverage the KakaoTalk messaging app, with 38 million subscribers, and mobile payment service KakaoPay with five million users.
Tencent, which has a 4 per cent stake in Kakao Bank, set up China’s first internet-only bank WeBank in January, followed by Alibaba’s MYbank in June.