Internet-only bank group formed with SK Telecom

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Internet-only bank group formed with SK Telecom

Korea’s largest mobile carrier is teaming up with the country’s third largest financial company to form an online bank.

On Tuesday, SK Telecom and Hana Financial Group announced they are establishing a consortium along with Kiwoom Securities to create the institution. The group will be led by Kiwoom Securities, which will also hold the largest stake in the venture.

With SK’s involvement, the bid for the internet-only license will be the first involving a conglomerate.

“SK Telecom will try to bring its technologies related to artificial intelligence (AI), big data and quantum cryptography to ease inconveniences in financial services, while Hana Financial Group will draw on its expertise in providing digital banking services,” an SK press officer said.

Since the parent group of the mobile company - SK - is categorized as a conglomerate, as it has more than 10 trillion won ($8.9 billion) in assets, SK Telecom will be limited to no more than 10 percent of the group.

The carrier teamed up with Interpark, a local e-commerce firm, for a 2015 bid for an internet-only license.

SK Telecom has worked with Hana Financial in the past. It holds a 10-percent stake in Hana SK Card, a credit card affiliate of Hana Financial.

It also formed Finnq, mobile financial platform, with Hana Financial in 2016.

Hana Financial has repeatedly said it is reorienting itself toward digital services.

Hana Financial is cooperating with Line, a Japan-based internet messaging service owned by Naver, to start an internet bank in Indonesia.

Kiwoom Securities, a mid-sized brokerage strong in retail, popularized online stock trading in the country.

The company has a strong interest in internet-only banking and has signaled its seriousness by forming an internal task force on the subject.

The SKT-Hana-Kiwoom move comes after Shinhan Financial Group formed a partnership with Viva Republica, the company behind the Toss payment app, to launch a purely digital bank.

In addition to companies that have confirmed their intention to bid, others attended an introductory session held by the regulators outlining the bidding process. The list includes BGF Retail, which runs the CU convenience store chain, WeMakePrice and Interpark, both e-commerce players, and a number of smaller IT companies, such as TmaxSoft. Kyobo Life Insurance, also attended, as did Oracle and LG CNS.

The country’s financial regulators - the Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) - will accept applications from internet-banking hopefuls this March. Up to two final candidates will be announced in May.

So far, the country has two internet-only banks, Kakao Bank and K Bank. Naver said in January it is not interested in lodging an application.

FSC Chairman Choi Jong-ku stressed the importance of the upcoming bids.

“We will approve two new internet-only banks - at a maximum - in this round,” Choi told reporters Monday. “After that, opportunities will be limited.”

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