Financial Authorities "Actively Supporting Internet Banks' Role as 'Meggi'"

As financial authorities continue discussions on improving the banking oligopoly centered around the five major banks, they have expressed a strong willingness to actively support internet-only banks.

On the 27th, the People Power Party Policy Committee, Representative Yoon Chang-hyun of the People Power Party, and Kakao, K Bank, and Toss Bank hosted a forum at the National Assembly commemorating the 5th anniversary of internet banks and discussed future challenges. Shin Jin-chang, Director of the Financial Industry Bureau at the Financial Services Commission, who attended as a government panelist, stated, "Internet banks are at a stage where they need to solidify their foundations," and emphasized, "Financial authorities will actively support internet banks so that they can fulfill their role as 'catfish' within the banking sector."

Kim Young-joo, Deputy Director of the Financial Supervisory Service, also said, "Securing sufficient loss absorption capacity and maintaining trust with consumers are important for the continued innovative growth and financial inclusion of internet banks," adding, "The Financial Supervisory Service will also strengthen active communication efforts to support innovative growth."

During the forum, regarding measures to resolve the banking oligopoly, opinions were expressed that internet banks might be more effective than introducing new banks. Shin Sung-hwan, a member of the Monetary Policy Committee and former president of the Korea Institute of Finance, said, "Adding a small number of undifferentiated new banks may initially promote competition in deposits and loans, but there is a high possibility of reverting to an oligopoly market after a certain point," and noted that the innovative capabilities of internet banks could be the driving force of competition. He emphasized, "Internet banks have a distinctive advantage in high-level innovation capabilities such as platform operation and data analysis," and added, "Since internet banks were created to strengthen competitiveness within the banking sector, it is necessary to continue developing user-centered services for overall financial innovation, provide financial services targeting sectors previously marginalized in the traditional banking industry, build future financial infrastructure, and participate in practical applications."

The panelists evaluated the achievements of internet banks as having successfully settled in the market by increasing non-face-to-face convenience, expanding mid-interest rate loans, improving competition in the banking industry, and enhancing consumer benefits. Professor Yeo Eun-jung of Chung-Ang University said, "Although the three internet banks pursue different business models, they have successfully established themselves in the market," and added, "They have contributed to improving mobile financial convenience and expanding mid-credit loans."

However, advice regarding risk and profitability management was also given. Lee Byung-yoon, Senior Research Fellow at the Korea Institute of Finance, said, "Internet banks have greatly contributed to promoting competition in the banking industry, and thorough risk management is necessary for the recently increased mid-interest rate loans," advising, "In the future, efforts should be made to expand profitability through strengthening alternative credit evaluation capabilities and overseas expansion." Professor Min Se-jin of Dongguk University argued, "From the perspective of improving banking industry efficiency and consumer welfare, internet banks are very positively evaluated, but to prevent potential mobile run incidents, it is necessary to raise the deposit insurance limit and flexibly set targets for the proportion of loans to low- and medium-credit borrowers."