Korea's best digital bank 2017: Kakao Bank
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Korea's best digital bank 2017: Kakao Bank

Kakao Bank

Kakao Bank has become a powerful presence in its home market very quickly. In the 24 hours after the internet-only bank was launched in July 2017, 300,000 people applied for accounts, more than the number of requests most traditional lenders receive through their online channels in a year.

By the end of September, it had attracted deposits worth Won3.3 trillion ($3.05 billion), and disbursed loans worth Won2.6 trillion, according to internal data. In August alone, it accounted for 40% of all new lending in the country to retail customers.

Internet-only banking has been surprisingly slow to take off in South Korea, one of the world’s most online nations, largely because regulations prevent a non-financial firm from owning a stake of more than 4% in any lender.

Kakao Bank’s owners Kakao Corporation, a leading domestic internet firm, remain within those ownership parameters, which are expected to be relaxed in future, thanks in large part to the success of Kakao Bank and its sole online-only rival, K-Bank, led by telecoms firm KT Corporation.

K-Bank, focused on lending to retail customers and smaller enterprises, was formed a few months before Kakao Bank in 2017, but has since struggled to grow.

Kakao Bank served further notice of its long-term ambitions in September, when it raised Won500 billion, as part of a refinancing plan to bolster its lending business.

The young lender is owned 58% by Korea Investment Holdings, with smaller stakes controlled by the likes of eBay and Chinese digital firm Tencent Holdings.

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