FSC boss checks up on web bank

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FSC boss checks up on web bank

New web-based banks might lead the overseas expansion of Korean financial institutions, Yim Jong-yong, chairman of the Financial Services Commission (FSC) said on Monday.

In a meeting with a task force team of K-Bank, an online bank that is going to start in the second half of the year, FSC Chairman Yim highlighted the overseas competitiveness of the new type of banks.

“Internet banks need to have innovative business models that will be competitive not only in the domestic market but also in overseas markets,” Yim said during his visit to the temporary office of K-Bank in Jongno District, central Seoul.

The FSC chairman visited the nation’s first web-based bank to check on its progress.

After the financial authority preliminarily approved K-Bank and Kakao Bank to start online banking services in November, they have been preparing operations with an aim to launch in the second half of this year.

The two banks are applying for final approval from the authority, including establishment of an official bank organization, capital investment, employment of workers and executives and introduction of computer systems.

K-Bank is owned by a consortium of 21 partners, including phone provider KT, and has 250 billion won ($215 million) in capital. The bank’s major shareholders are KT, Woori Bank, GS Retail, Hanwha Life Insurance and Danal.

The consortium says it possesses a vast range of data on about 200 million customers, including information on 26 million credit card payments offered by BC Card, and KT’s history of mobile phone bills from 30 million people.

“Since simple online payments, mid-range interest rate loans and online investment advisory services are already seeing intensifying competition here, the web-based banks need preparation for overseas markets from the very beginning,” Yim said. “Internet banks that are free from language and cultural barriers might be a successful model for overseas expansion by Korean financial institutions.”

The chairman said the authority has lifted a number of regulations that will allow operations of online banks.

“Constraints on online banking have been pretty much removed,” he said.

Since the approval of the web-based banks, regulations that banned online, non-face-to-face subscriptions to insurance products and new banking accounts have been removed.

The authority may approve two more web-based banks.

BY SONG SU-HYUN [song.suhyun@joongang.co.kr]

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