Kakao Bank Eyes Online Payment Industry
John Kim, July 4, 2017, 12:36 p.m.
Kakao Bank, South Korea's second Internet-only bank, aims to eventually lead the online payment market, by taking advantage of its robust mobile ecosystem, the bank's two co-chief executives said Tuesday. Kakao Bank, led by Kakao Corp., operator of Korea's dominant messaging app KakaoTalk, is set to officially begin its operation later this month. Kakao's consortium includes Korea Investment Holdings Co., Kookmin Bank, eBay Inc. and China's Tencent Holdings Ltd.
Although Kakao Bank will focus on expanding online banking services in its initial stage, Yun Ho-young, one of the bank's co-CEOs, said it will eventually launch a so-called "app-to-app" payment service. The payment service allows a user to pay for purchases without using a financial network of credit-card firms. Instead, it will enable a user to pay for purchases with Kakao Bank's app, helping retailers save commission fees charged by credit-card companies and give buyers more financial benefits.
"When we attract a number of customers and member stores, we plan to launch the payment service," Yun said. "In the future, people will think of an app if they want to open a bank account. Kakao Bank will become the most-sought after bank when the time comes," Yun said. The nation's first Internet-only bank, K-Bank, led by traditional telecom company KT Corp., began operations in April. The pace of growth in K-Bank's deposits and loans is much faster than expected. At the time of its launch, K-Bank aimed to lure deposits of 500 billion won (US$434 million) for all of 2017, with the lending target set at 400 billion won.
Last month, K-Bank attained the full-year target for deposits and loans. Yun and other co-CEO Lee Yong-woo stopped short of setting Kakao Bank's target for deposits and loans. After about one-month of operation, Kakao Bank is expected to announce its business target, they said. Lee said Kakao Bank will make inroads into the credit-card market next year, adding that credit-card information of its customers would be vital for its mobile services. With a paid-in capitalization of 300 billion won, Korea Investment Holdings Co. and Kakao hold a 58-percent and 10-percent stake in Kakao Bank each. Yun said the bank will raise capital next year if necessary.