[Q&A] Shin Won-geun "Not Selling Kakao Pay Insurance... Competitiveness Up with New Products"

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Shin Won-geun, CEO of Kakao Pay, is announcing this year's business direction at a hotel in Yeouido, Yeongdeungpo-gu, Seoul on the 15th.

Shin Won-geun, CEO of Kakao Pay, dismissed the long-rumored sale of Kakao Pay Insurance. While various collaborations are being considered, the company has no plans to transfer management rights. They plan to establish new products and business structures that allow users to design insurance policies themselves and receive insurance payouts easily.

On the 15th, Shin Won-geun held a press conference at a hotel in Yeouido, Yeongdeungpo-gu, Seoul, where he stated this. He said, "Kakao Pay is open to collaboration with external strategic partners and external equity investments for the growth of Kakao Pay Insurance," but drew a clear line by adding, "However, we are not considering selling our shares or transferring management rights."

Previously, there were industry reports that Kyobo Life Insurance was conducting due diligence to acquire Kakao Pay Insurance. However, this was completely denied. Along with this, the expansion direction of Kakao Pay Insurance's business was also detailed.

First, they plan to fully implement a method that offers insurance discounts when multiple people join together. They also intend to add features such as gifting insurance to increase accessibility to insurance. Additionally, users will be able to design their own insurance policies and determine premiums and coverage themselves. It is a kind of 'DIY insurance.' They will also improve the insurance claim process with features like refunds for no accidents, automatic claims, and 3-second compensation. Above all, they announced that these processes will be combined with Kakao's main platform's generative artificial intelligence (AI) to allow users to request and execute them easily using everyday language.

CEO Shin emphasized, "Unlike long-term insurance, daily insurance that provides coverage at necessary moments is cheap and has fewer sales channels, so insurance companies rarely create them, but demand is the highest. We will change the insurance experience itself, transfer decision-making power to users, and return value to consumers by improving operational efficiency through technology."

In addition, expansion strategies for the loan brokerage platform and Kakao Pay Securities were also revealed. The plan is to actively seek growth not only in the 'core business' of simple payments but also in other areas such as insurance, loan brokerage, and securities. Below is a Q&A session with CEO Shin Won-geun and key executives.

- What impact has Apple Pay's entry had, and what is your response strategy?

▲ The offline simple payment market is still small, so Kakao Pay has relatively high growth potential. Apple Pay is a strong competitor but also has the effect of converting a market dominated by physical cards to mobile payments. Most large franchises that accept Apple Pay also accept Kakao Pay, and automatic membership point accumulation is possible. Kakao Pay's offline payment volume has not changed significantly since Apple Pay's launch.

Kakao Pay is focusing on expanding the offline market centered on everyday life sectors such as convenience stores, marts, cafes, and bakeries. Recently, they started the 'Nearby Services' business, which benefits both consumers and merchants. Individual merchants provide separate discount benefits as a marketing tool, and users receive discounts. They also plan to expand contact points with customers and businesses through collaboration with other affiliates. Integration with Samsung Pay is under discussion but not yet finalized. (Baek Seung-jun, Kakao Pay Business Leader)

- What are your plans for expanding the postpaid payment market?

▲ We see transportation as the area most in need of postpaid services and are currently providing services there. We will share specific plans once they are prepared. (Baek, Leader)

- What are your plans for expanding the loan brokerage platform business?

▲ We have been operating mainly with credit loans, which were perceived as possible non-face-to-face, but awareness is growing that mortgage loan products can also be non-face-to-face. We started handling mortgage loans from March this year and are currently negotiating with three commercial banks, two savings banks, and one insurance company. We will continue to increase products. Securing major commercial banks is key for the refinancing loan platform, and positive discussions are ongoing with several major commercial banks. (Baek, Leader)

- What new businesses do you expect this year?

▲ We aim to position Kakao Pay as an 'economic playground' where customers can actually feel economic benefits. For Kakao Pay Securities, we are offering promotions such as up to 5% annual interest on deposits, industry-low overseas stock trading fees through the acquisition of U.S. securities firm Seubert, and credit trading interest rates as low as about 3.9% annually to maximize benefits for users. We are also considering exporting solutions that combine mobile trading systems (MTS) and asset management.

Additionally, with expected regulatory easing in the financial product brokerage sector, we plan to expand brokerage businesses such as refinancing loans, cards, deposits/savings, and insurance. We will also increase profitability by introducing various specialized advertising models unique to Kakao Pay. (Baek, Leader)

- Are there any additional merger and acquisition plans?

▲ Along with organic growth opportunities, we are also exploring inorganic mergers and acquisitions (M&A). Our perspective focuses clearly on synergy with Kakao Pay. This means we are looking at companies that possess the technical and service capabilities we need. (CEO Shin)

- First-quarter results still show a loss. When do you expect profitability improvement?

▲ Q: Operating loss widened in Q1. Plans for performance improvement? When will parent and subsidiaries turn profitable?

= Kakao Pay recorded a profit on a standalone basis in Q1 this year, but due to infrastructure investment costs related to the launch of MTS and the insurance business, a loss was recorded. We expect both revenue and operating profit to increase as transaction volume grows. We will strive to achieve financial performance through stable revenue model management and efficient cost spending.

Regarding subsidiaries, it is difficult to disclose detailed separate sales targets, but Kakao Pay Securities is expected to achieve meaningful growth this year in the retail sector, especially in stock services. Kakao Pay Insurance is still in the early stages of business and is focusing more on launching new and innovative insurance products and services. (Han Soon-wook, Kakao Pay Operations Leader)

- Are you preparing any stock price support measures?

▲ First, we apologize for causing concern to investors. We will strive for steady and stable growth to increase corporate value. Making core services more user-friendly and linking them to revenue-generating businesses to find new business opportunities is our effort to support the stock price. Regarding share buybacks, Kakao Pay itself turned profitable for the first time last year, but securities and insurance are still in the early investment stage and currently operating at a loss. Dividend payments or share buybacks and cancellations are structurally impossible. We believe that with steady profit generation and profitability improvement at Kakao Pay itself, we will soon be able to post profits on a consolidated basis. We will actively consider stock price support measures going forward. (CEO Shin)