Korea’s First Internet-Only Bank To Open Next Month

by SophiePadz / Mar 31, 2017 08:17 AM EDT

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K Bank will open next month which is considered as Korea's first Internet-only bank. However, some questions still arise if this bank will be able to distinguish itself as a feasible online lender.

The establishment of this bank has been initiated by Korea's top telecom operator KT. According to the company, the retail operation of the bank will begin on April 3 while CEO Shim Sung-hoon is set to present the main businesses of the bank to the press and the media.

According to reports, they will provide quick mobile remittance based on cellphone numbers and medium-level interest loans. Prior to its launching and opening, the bank refused to disclose details about it but it will likely to permit a K bank account holder to send money to another account holder in the bank. This will be made possible using a text message like the remittance amount.

Apart from this feature, the K Bank or the Korea's first internet-only bank will also provide loans with interest rates between 4.9 and 15.5 percent which is not usually covered by card issuers and commercial banks. This bank is also expected to utilize fingerprint ID which is used to authenticate tool for loans as reported by Korea Times.

But some observers claimed that it is still unsure if the K Bank will make its presence felt through the unique and advanced technologies. The Banking Act also states that there must be a strict separation between industry and finance to limit industrial capital from holding more than 4 percent of shares with voting rights in a bank. It can be recalled as per Financial Times that KT holds only 8 percent in the K Bank compared to Woori Bank which has 10 percent stake with voting rights.

It has been reported too that in order for K Bank to operate its lending business smoothly, it needs to increase its capital using various ways and means. In order to meet the BIS capital adequacy ratio, the bank must add another 250 billion won by the end of the year to its 250 billion won capital.

But KT may not be able to increase its shares in the bank because the act needs to be revised. If it will be based on the current system, there is a chance that Korea's internet-only banks may become also-rans.