South Korea gave preliminary approval for two groups — one from the new economy and another from the old, and both with Chinese partners — to set up the nation’s first Internet-only banks as the government seeks to reinvigorate a sector suffering from slow growth and slim margins.
Kakao Corp, operator of Korea’s leading messaging app KakaoTalk, and KT Corp, the former government phone monopoly, were chosen from a field of three applications.
A group headed by online retail operator Interpark Corp was unsuccessful.
The approvals would be finalized after the National Assembly passes legislation allowing Web-only banks to operate, according to a joint statement from South Korea’s Financial Services Commission (FSC) and Financial Supervisory Service.
Establishing Internet-only banks “should inject healthy competition in the local financial market and improve the financial industry,” FSC chairman Yim Jong-yong said in the statement.
South Korea’s government is offering the online-banking permits in a bid to drive innovation and deregulation in a sector that’s crucial for financing the country’s economic expansion.
Online-only banks are to be able to offer a wider range of customer services from existing commercial banks and offer easier access to credit for start-ups and small businesses, the statement said.
South Korea is lagging behind China, Japan and the US in the development of Web-based financial services.
Kakao’s group includes a 50 percent stake from Korea Investment Holdings Co and a 10 percent holding from Kookmin Bank, the regulators said.
Tencent Holdings Ltd (騰訊), the operator of China’s WeChat service is affiliated with one of Kakao’s partners, while Alipay (支付寶), the online payment arm of Jack Ma’s (馬雲) Alibaba (阿里巴巴) empire, is among KT Corp’s partners, according to an FSC official who declined to give their name citing internal policy.
Other KT group members include Woori Bank, GS Retail, Hanwha Life Insurance and Danal Co, all of which have 10 percent holdings.
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