Citi
As traditional banks compete to lead the way in digital banking, one internet-only bank has stood out for its innovation, its presence in the market and its offerings to customers: kakaobank.
Since attracting 240,000 customers within the first 24 hours of opening, kakaobank has become the biggest mobile-first bank in South Korea. By the end of September 2019, it had 10.7 million customers.
The bank’s chief executives, Yan Lee and Daniel Yun, are masters of marketing: their app builds off the appealing mobile instant messaging app KakaoTalk, with its cute animal emoticons and millennial-friendly design, to make online banking attractive to young customers in a way that keeps them engaged and using the app.
The bank’s model has inspired traditional players to follow suit: for example, Shinhan Bank’s mobile app SOL sports a teddy bear and his purple mole friend.
Having a tech-first attitude – more than 40% of kakaobank’s staff are in IT – allows it to be more innovative than the old guard. Behind kakaobank’s cartoon mascot is serious ambition. The company reported its first net profit after the first quarter of 2019 — a year earlier than expected.
At the end of June, it reported net income of W9.6 billion ($8.1 million). The company’s simple product offering includes a checking account, debit card, loans and overseas remittances, but it will eventually offer customers more. For instance, kakaobank has partnered with Citi and others to begin offering credit cards.
By offering starter banking services to young people, kakaobank is able to tap into a market that traditional banks desperately want and need to maintain business in the long run. The vast majority of kakaobank’s customers are in their 20s and 30s. The hope is that by forming a relationship with the bank now, they may turn to it in future when they have more money and are seeking home loans, insurance and wealth management services.