[1mm Financial Talk] Toss Shifts 'Personal Credit Evaluation' to Non-Financial Data

Withdrawal of Personal CB Subsidiary Establishment... Transition to Internal Business Organization
Competing with Data as a Basis for Non-Financial Business Expansion
Business Requirements Also Easier... Aggressive Targeting of 'Thin Filer'

Toss has completely revised the direction of its credit rating (CB) business, which it had identified as a new growth area. The company has decided to temporarily halt its entry into the personal CB market, which is dominated by existing firms, and instead focus on the 'non-financial' personal credit information sector.

According to industry sources on the 1st, Toss's operating company, Viva Republica, recently established an internal team called the 'Credit Data Tribe' for its credit rating business. Initially, it had set up a preparatory corporation and hired experienced professionals and lawyers to establish a specialized credit rating subsidiary tentatively named 'Toss Credit Data.' However, it has now abandoned plans to create a subsidiary and instead formed an internal business division with about 30 members. This marks a tentative retreat just a year and a half after it announced a major push into the personal CB market, which is a 'red ocean' dominated by NICE Information Service, Korea Credit Bureau (KCB), and others.

At that time, Toss planned to aggressively target 'thin filers'?students, housewives, and the elderly who lack sufficient financial transaction history and thus fall into credit blind spots?by leveraging its vast accumulated financial data. However, the strategy has shifted to starting the credit rating business gradually from the non-financial specialized CB sector, which faces fewer regulatory requirements than the personal CB business.

The non-financial specialized CB uses non-financial data such as telecommunications bill payments rather than financial data to evaluate personal credit. From Toss's perspective, it has secured the data and meeting the licensing requirements is relatively easier compared to personal CB. Since the amendment to the Credit Information Use and Protection Act (Credit Information Act) passed in November 2019, the existing credit rating business has been divided into personal CB, personal business CB, and corporate CB. Personal CB includes non-financial specialized CB, while corporate CB is categorized into information inquiry business, corporate rating provision business, and technology credit rating business. Among these, personal CB requires more than 50% ownership by financial companies and a capital of 5 billion KRW. In contrast, non-financial specialized CB requires a capital of 500 million KRW (2 billion KRW for large-scale structured data) and has no restrictions on financial company investment. This means Toss can conduct the business sufficiently without establishing an independent corporation.

Data accumulated through expanding into various non-financial sectors is also a key asset. Toss believes that by utilizing data from simple payment services, telecommunications bill payments in the MVNO business, and non-financial data held by partners, it can effectively evaluate the credit of thin filers. Interest in non-financial CB is already growing across various fields. Kakao Bank has also applied for a preliminary license for non-financial CB from the Financial Services Commission. The three major telecom companies?SK Telecom, KT, and LG Uplus?are preparing to launch a joint non-financial CB corporation within the year.

A Toss representative explained, "This is still an early-stage business concept, and we have not yet applied for official approval from the authorities. We expect non-financial CB to enable credit evaluation for thin filers or to complement existing personal credit evaluations."