[Practical Finance] In the Era of High Interest Rates... Save Even 0.1%, Raise Even 0.1%

Popularity of Loan Brokerage Platforms in the Personal Loan Market Increases
Compare Interest Rates from 50-60 Financial Institutions in Seconds
High-Interest Savings and Time Deposits Require Diligent Searching

[Asia Economy Reporter Minwoo Lee] As we enter a full-fledged high-interest rate era, lowering loan interest rates and raising deposit and savings interest rates have become essential. Experts advise that it is necessary to utilize various comparison platforms and services comprehensively.

"Let's lower even by 0.1%"... Focused Use of Fintech Platforms

With the rise of comparison platforms in the loan market recently, more people are trying to reduce their loan rates through these platforms. According to a recent inspection by the Financial Supervisory Service on the use of online loan platforms by domestic banks, household loans recruited through such loan platforms last year totaled 3.1 trillion KRW, accounting for 1.7% of all new loans. KakaoPay, Toss, and Finda are representative companies.

Although their share in the overall loan market is still small, they are emerging as a trend at least in the unsecured loan market. There are 50 to 60 affiliated financial institutions, and interest rate comparisons can be completed within seconds. As high interest rates are expected to continue for the time being, demand for switching by comparing various loan products is expected to increase further.

The largest players are KakaoPay and Toss. They launched their loan comparison services in October 2019 and August 2019, respectively. According to the Financial Supervisory Service, these two platforms account for 86.8% of the market share. KakaoPay has partnerships with a total of 55 financial institutions, including banks, card companies, insurance companies, savings banks, and capital companies. It boasts the strength of having the most partnerships with first-tier banks (12 banks). In fact, Shinhan, Hana, and Woori Banks recruit loans through KakaoPay's loan comparison service. A KakaoPay representative said, "We have expanded users' choices by offering various policy-based financial products for low-income earners such as credit loans, jeonse and monthly rent loans, card loans, and products like 햇살론 (Haetsal Loan) and 사잇돌2 (Saitdol2), which are difficult to access due to lack of information, as well as insurance policy loans and preferential loans for insurance customers that are easy to overlook."

Toss is rapidly growing by leveraging the convenience of a 'one-app' strategy. Existing Toss customers do not need to download a separate application; they can complete everything from loan comparison to execution within the Toss app. They emphasize the advantage of being able to compare credit loan products from multiple financial institutions in about 20 seconds. Since launching the service in August 2019, Toss surpassed 1 trillion KRW in monthly loan execution amount for the first time last month. The total cumulative loan execution amount has reached 11.1 trillion KRW. Currently, users can compare products from 53 financial institutions, including major commercial banks such as Shinhan, Woori, and Hana, internet-only banks like Toss Bank, major regional banks, and savings banks. A Toss representative explained, "There are even partners offering exclusive preferential interest rates only on Toss, and the process from the loan comparison start screen to the actual loan is smooth, allowing users to use the service more conveniently."

Finda started its loan comparison platform in July 2019, slightly earlier than Toss (August 2019) and KakaoPay (October 2019). It has the largest number of affiliated financial institutions at 63. The loan balance currently managed reaches 63.5881 trillion KRW. Unlike KakaoPay and Toss, Finda focuses solely on loan comparison. A Finda representative said, "We do not pursue advertising revenue, so rather than how many customers we mediate to affiliated financial institutions, our goal is to connect customers with the loans they need. After linking with joint certificates, financial certificates, and private certificates, we secure income tax information submitted to the National Health Insurance Service and deliver it to financial institutions, which is a strength in terms of accuracy."

Auto Loans and Business Loans Appear... Mortgage Loan Products Are ‘Insufficient’

In addition to the main credit loan products, jeonse loans and auto loans have also appeared on loan comparison platforms. Last month, KakaoPay became the first financial platform to start brokerage services for K-Bank’s jeonse and monthly rent loan products guaranteed by the Korea Housing Finance Corporation. Finda recently launched the ‘Connected Car 1Q Auto Loan’ in collaboration with Hyundai Motor, Kia, and Hana Bank. Naver Financial plans to launch the industry's first personal business loan product comparison service in the second half of the year.

However, there is a limitation in that mortgage loan products are insufficient. None of the five major banks?KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup?have partnered with loan comparison platforms for mortgage loan products yet. Only some regional banks, insurance companies, and savings banks with weak nationwide operations have offered mortgage loan products on platforms. This is interpreted as banks being reluctant to partner due to concerns about becoming dependent on platforms. In fact, SC First Bank, Samsung, Hanwha, Kyobo, Heungkuk Life Insurance, and Samsung Fire & Marine Insurance have listed mortgage loan products on Toss. KakaoPay and Finda do not have mortgage loan products yet.

"Raise even by 0.1%"... Need to Seek High-Interest Deposit and Savings Products

On the 25th, as the Bank of Korea raised the base interest rate from 0.75% to 1.0% per annum, commercial banks began increasing interest rates on savings and time deposits. The photo shows a notice related to savings and time deposits posted on the exterior wall of a bank in downtown Seoul on the same day. Photo by Moon Honam munonam@

As interest rate hikes become full-fledged, the financial sector is releasing deposit products with high interest rates. It is easy to find deposits with interest rates in the 3% range and savings products with rates in the 5% range. Since the Bank of Korea is expected to raise the base rate further, it is necessary to pay attention to ‘financial technology’ (Yetech).

IBK Industrial Bank has released three deposit products offering over 3% annual interest for 12 months. The ‘IBK D-DAY Account’ offers up to 3.45% annual interest. Regional banks are also releasing high-interest deposit products, such as BNK Busan Bank’s Low Carbon Practice Deposit (3.15% annual interest) and DGB Daegu Bank’s DGB Main Transaction Preferential Deposit (First-time Customer Type) with 3.06% annual interest. K-Bank’s CodeK Fixed Deposit offers up to 3.00% for 12 months and 3.50% for 36 months without requiring special preferential conditions.

Savings products with interest rates exceeding 5% are also emerging one after another. The National Credit Union Federation of Korea launched the ‘Credit Union Plus Regular Savings’ in March in partnership with Shinhan Card, offering up to 8% annual interest. Customers can pay up to 300,000 KRW per month for one year, with a base interest rate of 2.5% and preferential interest rates up to 5.5%. Jeonbuk Bank’s ‘JB Card Financial Technology Savings (Regular Installment Type)’ offers up to 6.00% annual interest for 12 months. Hana Bank’s ‘Double Up for Home Purchase Savings’ also offers interest rates in the 5% range for 12 months, the highest among first-tier banks’ savings products. Other products such as Shinhan Bank’s ‘Shinhan New Hope Savings’ and K-Bank’s ‘CodeK Flexible Savings’ offer up to 5% interest for 36 months.

An official from a commercial bank advised, "The Bankers Association website provides detailed interest rate information, making it easy to compare deposit product rates. It is advisable to carefully check preferential conditions and choose products with appropriate terms, as this can be a stable investment method in the current unstable stock market environment."