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South Korea's Financial Services Commission Grants Kakao Corp. and KT Corp Preliminarny Licenses To Set Up The Country's First Internet-Only Banks

by Therese Agcopra / Nov 30, 2015 04:42 AM EST
Hassle-free banking: web-based banking will provide banking transactions without having to visit banks personally. (Photo by Daniel Berehulak/Getty Images)

South Korea's Financial Services Commission (FSC) said Sunday the government has granted Kakao Corp and KT. Corporation preliminary licenses to the set up the first Internet-only banks.

Kakao Corp., operator of South Korea's premiere messaging platform KakaoTalk, and KT Corp., South Korea's second-largest mobile carrier, were chosen from a field of three applicants that will be commissioned to establish the nation's first ever web-based banking services.

Korea Herald reported Monday, Kakao Bank garnered high scores for its innovative online services, particularly KakaoTalk. KT Bank was praised for its efficient access to customer, due in part to the company's partners from various sectors such as retail and telecommunications.

The web-based bank will operate in the same manner as commercial banks from processing deposits, loans and money transfers. The only difference is that clients will no longer need to personally visit bank branches to open bank accounts or apply for loans, Korea JoongAng Daily noted Monday.

According to Korea Herald, the South Korean government is granting online-banking permits to reinvigorate a sector that seen as a potential bloodline that will finance economic expansion in the country.  

Kakao currently holds a 50 percent share from Korea Investment Holdings Co. and a 10 percent stake from Kookmin Bank. KT Corp. on the other hand is partners with Alipay, the online payment services for online shopping haven Alibaba.

"It will likely cost about 100 billion won (US$86.5 billion) to set up the network. We expect to break even after three years," Korea Investment Holdings managing director Lee Yong Woo said.

Lee added Kakao Bank will make use of KakaoTalk, which currently has 38 million members in South Korea, to market their services.

Kakao Bank and KT Bank are expected to begin operations once they receive a final approval from the Financial Services Commission within the first half of next year. 

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