Stampede to sign up for Kakao Bank crashes some servers
The bank opened for business online at 7 a.m. and was paralyzed within hours.
Jay Seo, an office worker in her late 30’s, tried to create an account at 10 a.m. after hearing Kakao Bank offered higher interest rates on deposits than regular banks. Seo gave up after her application completely froze. After an hour-long attempt to sign up, all she had to show for it was a slew of verification text messages from the bank, indicating she didn’t get past the initial stage. Seo said she deleted the bank’s app from her phone.
“A number of users exceeding our expectations tried to log on in such a short span of time,” explained Lee Yong-woo, a co-chairman of the bank.
“Our internal system can handle up to 100,000 users per hour,” explained Yoon Ho-young, the other co-chairman of Kakao Bank, when asked about the mess during an opening ceremony for the bank in Banpo-dong, central Seoul.
Yoon’s statement suggested more than 100,000 were trying to sign up simultaneously during several hours. He added that the bank expanded the capacity of its server by ten-fold for the opening day, and still it wasn’t sufficient.
“We apologize for the situation as we did not anticipate this much traffic on our first day,” added chairman Lee.
Kakao Bank was far more popular on its first day than rival K bank, Korea’s first internet-only bank, which opened in April. K bank had 40,000 new subscribers by the end of its opening day. Kakao Bank easily topped that.
As of 7 p.m., the bank had over 187,000 subscribers. It also received 42.6 billion won ($38.2 million) in deposits and issued 14.5 billion won in loans by then.
Unlike K bank, Kakao Bank offered an international money transfer service from the get-go. Its transaction fee for that service is set at 5,000 won, one-tenth of what commercial banks in Korea charge. Its link to Kakao Talk - the top messenger app in Korea operated by information technology giant Kakao - is considered its strong suit.
Kakao Bank applicants can log in through their Kakao Talk accounts. Kakao Bank customers can conduct financial transactions with anyone with an account with the messenger app.
While its yields on deposits are similar to K bank, Kakao Bank offers better loan options: customers can borrow up to 100 million won at an interest rate as low as 2.86 percent. K bank currently has a credit line option of borrowing up to 3 million won at a rate as low as 5.5 percent.
The server congestion had a ripple effect that jammed the servers of key partners. Servers of credit bureaus such as Nice Information Service reportedly were on the verge of shutting down.
Banks that rely on their services were also affected. KB Kookmin Bank, a leading commercial bank that uses Nice Information Service, experienced a delay in processing loan applications on Thursday, according to a company source.
The stakes are high for the new internet-only banks, according to financial authorities.
“[Korean financial authorities] have high expectations for internet-only banks as they will increase industry-wide competition, which will ultimately lower consumer prices and increase the quality of services,” said Choi Jong-ku, chairman of the Financial Services Commission. “The government will support with necessary policies to allow new players to stay active in the market.”
BY CHOI HYUNG-JO [firstname.lastname@example.org]