'Mouse Banking' Is a Hit With Korean Borrowers

Internet banking, especially requests for loans over the Internet, is rapidly becoming more popular. The Bank of Korea said Sunday that there were 274,000 Internet loan applications last month requesting almost 2 trillion won ($1.5 billion) in June, the bank said.

Only 18 percent of the loan requests were granted, but those loan approvals were more than three times the value of such loan approvals. The amount of money actually lent over the net was 600 billion won.

About 1.2 million Koreans used the Internet for banking a year ago, according to the Bank of Korea. That number has skyrocketed to 7.4 million persons as of June 2001. Balance-checking is still the most popular use of online banking sites, the bank said, followed by money transfers among depositors' accounts.

Because of the cost savings to banks when its customers use the Internet, financial institutions are coming up with incentives for Internet use. Sixteen banks now pay higher interest on accounts that are managed over the Internet, and 12 charge their customers lower interest rates on loans applied for over the net. Twenty banks give discounts on money transfer fees if they are done electronically.

Seventeen banks also provide cell phone banking facilities to their customers, but those services are not as popular as Internet banking, the central bank said. Money transfers through mobile phone banking amounted to only 4,720 transactions in June.

by Suh Kyoung-ho