K Bank Lowers Interest Rates and Raises Limits for 'Advance'... Resumes New Loans After Over a Year

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[Asia Economy Reporter Kim Hyo-jin] K-Bank, the 'first internet-only bank in Korea,' which is about to increase its capital by approximately 400 billion KRW, is accelerating its comeback by launching various credit loan products.

On the 13th, K-Bank announced that it had launched three household loan products: 'Credit Loan,' 'Overdraft Loan,' and 'Credit Loan Plus.' This marks the first time in over a year that K-Bank has expanded its new loan business. K-Bank explained that the newly introduced loan products apply a more advanced credit scoring system (CSS).

Unlike the previous method that combined financial transaction information from credit rating agencies with telecommunications data, the new approach incorporates transaction history with K-Bank as well, enabling big data analysis. Income information is also further segmented for more detailed evaluation grades.

Additionally, by applying machine learning techniques, customers with verified repayment ability are offered lower interest rates and higher credit limits, which is noteworthy.

The interest rate for the credit loan product is as low as 2.08% per annum (as of the 13th) with a 0.5% preferential rate applied. The overdraft loan launched simultaneously has a minimum interest rate of 2.38% per annum, which is among the lowest for mobile loans targeting salaried workers in the banking sector.

The maximum credit limit for the credit loan is 250 million KRW (150 million KRW for the overdraft loan). Considering that the maximum limits for major banks’ mobile loans for salaried workers range from 150 million to 220 million KRW, this is among the highest in the industry.

The Credit Loan Plus, aimed at medium-credit customers, has a maximum limit of 50 million KRW and an interest rate as low as 3.82% per annum. It also offers the advantage of no prepayment penalties, reducing financial costs.

K-Bank plans to soon launch a 'Personal Business Owner Credit Loan' product for small business owners and individual entrepreneurs. The overdraft loan limit will be increased by 20 million KRW from the existing product (30 million KRW) to enhance liquidity.

Kim Tae-jin, Head of Marketing at K-Bank, said, "By reorganizing and launching new loan products, we focused on providing tailored financial benefits in terms of liquidity and cost reduction for different customer groups such as salaried workers, self-employed individuals, and medium-credit customers. Moving forward, we will sequentially introduce innovative products based on the convergence of finance and information and communication technology, such as apartment mortgage loans that can be easily accessed via mobile without the hassle of visiting a bank."

K-Bank, which had been unable to conduct new loan business due to funding difficulties, will soon secure 396.6 billion KRW in capital through paid-in capital increases by major shareholders including BC Card, Woori Bank, and NH Investment & Securities. This will increase K-Bank’s capital to 901.7 billion KRW.

In line with this trend, K-Bank is currently recruiting experienced personnel in eight areas: banking app quality management, UX planning, UX design, post-loan management policy, anti-money laundering monitoring, anti-fraud, general affairs, and credit risk management.