[Internet Banks 5 Years⑥] After Kakao Bank's Success... Internet Banking Wave Hits Southeast Asia

KakaoBank Recognized as a Key Benchmark Case
Grab, Gojek Enter Financial Market Based on IT Platforms
Korean Companies Like Naver and Toss Also Target 'Blue Ocean' Opportunities

[Asia Economy Reporter Minwoo Lee] A wave of new digital-based banks, including internet-only banks, is sweeping Southeast Asia. The success of domestic internet banks such as Kakao Bank is seen as the catalyst, intensifying competition in the region.

Well Received Overseas... Cited as a Key Subject of Analysis

According to the financial sector on the 8th, Kakao Bank is recognized as a major success case of internet banks in overseas markets and is being analyzed accordingly. A senior official from a domestic Bank A said, "Kakao Bank is becoming a key benchmarking target for digital-based internet banks in overseas markets," adding, "The growth driven by the powerful platform and brand of Kakao, combined with government deregulation, is receiving considerable positive feedback."

In fact, Kakao Bank is also cited as an exemplary case by major analysis institutions. The global management consulting firm Boston Consulting Group (BCG) ranked Kakao Bank among the top internet banks. According to BCG’s mid-last year report, ‘Winning Strategies for Digital Banks in the Asia-Pacific Region,’ out of 250 digital banks worldwide, only 13 (5% at the time), including Kakao Bank, had surpassed the break-even point. There was not a single one in the Southeast Asian region.

The American business magazine Forbes also highly evaluated Kakao Bank. Among the 500 banks selected in last year’s global best bank survey, only 10 were Korean banks, with Kakao Bank ranking first among them. This survey was conducted based on responses from over 43,000 customers worldwide rather than financial results from audit or business reports. It focused on qualitative aspects, including not only individual bank satisfaction but also trustworthiness, transaction terms, customer service, digital services, and financial advisory.

Internet Bank Competition in Full Swing Locally

Competition among internet banks is already intensifying in the Southeast Asian market. The world’s largest accounting firm Ernst & Young predicted in a report that 10 to 15 internet banks will emerge over the next three years in Singapore, Malaysia, the Philippines, Indonesia, and other countries. Although the internet user population in Southeast Asia surpasses that of the United States, about 70% of people do not have bank accounts, indicating a high financial barrier. This is seen as a ‘blue ocean’ opportunity for local fintech (financial technology) platform companies.

Grab and Gojek, which have grown into the largest ride-sharing services in Southeast Asia, are representative cases. Grab formed a consortium with Singapore’s telecommunications giant Singtel and obtained an internet banking license in Singapore. It is also challenging internet banking in Malaysia. Gojek is expanding into finance, accelerating its digital banking business by acquiring a 22.16% stake in the listed commercial bank Bank Jago. Established Indonesian banks such as BCA Bank and BRI are also entering the internet banking market.

Korean Internet Banks Also Making Inroads

As the Southeast Asian market is considered a ‘blue ocean,’ domestic internet banks are also showing interest. Yoon Ho-young, CEO of Kakao Bank, expressed at a press conference in February, "The mobile technology Kakao Bank possesses is our greatest asset for overseas expansion," and added, "We want to showcase Korea’s financial technology capabilities abroad." Although the target countries, timing, and form of entry are undecided, Southeast Asia is considered a likely candidate.

Naver, which does not operate an internet bank domestically, is actively entering the Southeast Asian market. It has established internet banks in Thailand, Taiwan, and Indonesia, where its Japanese affiliate ‘LINE’ has a high mobile messenger market share. In Thailand, it expanded banking services in partnership with the local commercial bank Kasikorn Bank, and in February last year, it obtained approval from Taiwan’s financial authorities to officially launch LINE Bank.

The comprehensive mobile financial platform ‘Toss’ is also focusing on expanding into Southeast Asia. Toss has already entered Vietnam with the launch of a ‘pedometer-based reward service.’ It is expanding its scope by adding prepaid cards, insurance, and loan comparison services. This year, it plans to establish a global headquarters in Singapore.

[Internet Banking 5-Year Series Order]

① Internet Banks Used by Half the Nation... Have They Shown the Future of Banking?

② Kakao Bank Eyeing Customers in Their 50s... K Bank Rushing

③ "Played the Role of a Catalyst Properly... Real Innovation Changed Market and Culture"

④ MyData, the Battleground for Financial Companies and Fintech... Who Will Win?

⑤ Differentiation That Made or Broke Internet Banks Worldwide... The Answer is 'IT Finance'