Naver and Kakao Begin Full-Scale Expansion of 'Techfin' Business

[Asia Economy Reporter Jin-gyu Lee] Naver and Kakao are accelerating the expansion of their 'TechFin' businesses. Naver plans to launch the 'Naver Account' next month, while Kakao is also set to establish a digital non-life insurance company soon.

According to Naver on the 25th, Naver Financial, established in November last year, will introduce the Naver Account around the end of May and subsequently offer comprehensive financial services including credit card recommendations, securities, and insurance. The Naver Account operates differently from Kakao Bank's (Kabang) deposit and savings accounts. While Kabang directly opens deposit and savings accounts, the Naver Account is managed by financial partners such as Mirae Asset Daewoo, who create the accounts on behalf of users, providing benefits to users of Naver services like Naver Pay.

Naver expects the successful launch of the Naver Account based on Naver Shopping, which holds the top position in online shopping, and Naver Pay, which is rapidly increasing its market dominance. Despite the impact of the COVID-19 pandemic in the first quarter, the spread of contactless culture has led to noticeable growth in both Naver Shopping and Naver Pay. Han Seong-sook, CEO of Naver, stated during the first-quarter conference call on the 23rd, "Naver Pay's transaction volume increased by 46% year-on-year, surpassing 5 trillion won in a single quarter for the first time," adding, "In the first quarter, we focused on securing merchants and plan to expand primarily offline in the future."

Meanwhile, Kakao, which became the largest shareholder of Kabang at the end of last year, entered the securities business by acquiring a securities firm in the first quarter and is soon to challenge the insurance sector. Providing services across all financial fields including banking, stocks, and insurance, Kakao is expected to demonstrate unprecedented disruptive power based on 'KakaoTalk,' which has about 44 million members.

Kakao Pay is in the final stages of establishing a digital non-life insurance company together with Samsung Fire & Marine Insurance. They are promoting a digital insurance consortium to combine Kakao's IT capabilities with Samsung Fire's insurance business expertise. Kakao Pay plans to soon apply for preliminary approval of the digital non-life insurance company from the Financial Services Commission. Additionally, it is accelerating its expansion in the securities business. In February, Kakao Pay completed the acquisition of Baro Investment & Securities and renamed it 'Kakao Pay Securities.' As of last month, the number of securities accounts opened with Kakao Pay Securities has exceeded 500,000.