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Korea's online-only lenders Updated: 2021-10-14 12:16:05 KST

We turn now to the latest tech and business news here in this part of the world.
I have JEE ABBEY LEE here in the studio who will be covering the LATEST PLAYER to join the INTERNET-ONLY banking industry.
Right JEE?

Good afternoon, Sun-hee.
In today’s segment, let’s talk about the online-only lenders in Korea with a focus on the latest player, TOSS BANK.
It’s been a week since Viva Republica launched the Toss Bank service.
The mother firm has SIX COMPANIES under its umbrella its namesake Viva Republica and five other financial service providers including Toss Payments and Toss Securities.
Adding to these, the new banking service offers credit loans, savings and deposits.
But its primary focus is on expanding MID-RANGE interest rate loans.

Now Toss is a popular app here for payment service.
Do tell us more about its loan service.

The idea of an online lender was starting materialize back in Summer.
Earlier in June, the bank received final approval from Korea’s Financial Services Commission.
Ahead of the launch, Toss Bank set its minimum interest rate on credit loans at 2.76 percent per year, the LOWEST among commercial banks.
The average interest rate charged on credit loans offered by major commercial banks here have hovered between THREE to FOUR percent in recent months.
The lender vowed to extend more than THIRTY percent of its loans to borrowers with low to moderate credit scores like young people and small-business owners by the end of this year.
That is perhaps the biggest draw for Toss Bank… along with a whopping 2 percent interest rate on basic checking accounts.
It also doesn’t charge any A-T-M fees and offers 45-thousand 500 won worth of debit card benefits per month.
On the day of the launch on October 5th, more than 1.2 million people signed up for the service.

But how does ONLINE BORROWING work amid current government calls for tougher lending regulations to ease household debt?

Great question.
So here is a brief background before I get to the answer.
(STUDIO) As you rightly pointed out, under the MOON Jae-in administration, financial authorities have been seeking to REIN IN the country’s growing household debt and put a cap on real estate prices.
That led to STRICTER requirements for loans… including mortgages.
The regulator earlier this year urged local banks to limit the annual growth of their loans to only 5 percent… BUT… this target does NOT apply to lenders who operate ONLY online.

So there's a loophole for online lenders?

In a way… yes.
But they ARE subject to follow the authority’s suggestion to keep the maximum amount of credit loans allowed for individuals… to BELOW their annual earnings.
That’s why the new online bank has implemented the MAXIMUM LOAN LIMIT of 270 million won which is equivalent to about 230-thousand U.S. dollars.
The borrowing limit for credit loans via overdraft accounts at Toss Bank will be around 100 million won.

I see.
What are the other online-only banks in Korea?

There are two Kakao Bank and K Bank.
Kakao Bank is the country’s first online lender… established in 2017.
It’s still Korea's largest internet-only bank.
By the first half of this year, the number of KakaoBank customers reached 16.7 million, a 34 percent increase from the end of 2019. The bank also succeeded in generating a net profit within two years of its launch.
This performance is largely attributed to KakaoTalk's ubiquity among consumers with nine out of every 10 Koreans using the messenger.
K Bank also began operations in 2017… with its largest owner being the telecommunications giant, KT Corporation. Some 20 companies including Woori Bank and NH Investment and Securities have stakes in the online lender.
K Bank is also planning to go public on the Korea Exchange in two years.
Both Kakao and K bank offer MID-INTEREST-RATE products, AND announced they would expand the products' proportion to 20.8 percent and 21.5 percent, respectively.

And I hear Kakao Bank is looking to EXTEND its PRESENCE beyond national borders?

Kakao Bank is actually planning to expand beyond Korea… and it’s looking toward Southeast Asia.
A recent report by S&P Global Market Intelligence show, the internet-only bank has the potential to tap into millions of international users on the messaging app KakaoTalk.
The report mentioned two countries in particular as potentially viable markets.
The report stated"KakaoBank could target Thailand and Indonesia in its international plans, as these fast-growing economies are already the largest overseas markets for Kakao Corp.'s instant messaging platform.
Thanks to the bank's IPO back in August, KakaoBank has ample cash to fine-tune its overseas business plans.
That's all from me today.
KOGL : Korea Open Government License
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