Preliminary Approval Preparation Consortium Expands to 4 Groups
All Emphasize 'Inclusive Finance'
"Securing Financial Investors is Key"
The number of consortia preparing to launch the fourth internet-only bank has increased to four. They plan to submit preliminary internet bank license applications to financial authorities starting in May, after the general elections. Among them, two consortia (Deojon Bank and U Bank), backed by solid capital and excellent investors with financial expertise, are attracting attention.
ERP (Enterprise Resource Planning) specialist Deojon Bizon announced on the 4th that it will challenge the establishment of Korea's fourth internet-only bank. Under the name "Deojon Bank," it aims to establish the country's first internet bank specialized for small and medium-sized enterprises (SMEs) and small business owners, offering innovative finance based on corporate data, Deojon Bizon explained.
Deojon Bizon plans to form the Deojon Bank consortium by involving commercial banks, policy institutions, and large corporations as shareholders to strengthen competitiveness. Notably, among the four major commercial banks (KB Kookmin, Shinhan, Hana, and Woori Bank), Shinhan Bank, which has never invested in an internet bank, is considering joining the Deojon Bank consortium. A Shinhan Bank official stated, "Since acquiring shares in Deojon Bizon in 2021, the two companies have maintained a collaborative relationship, and based on this, we are positively reviewing participation in the consortium."
Thus, the number of consortia preparing the fourth internet bank has increased to four. Last September, KCD (Korea Credit Data) formed a task force (TF) to establish an internet bank specialized for small business owners and is preparing to launch KCD Bank. Similarly, there is the "Soso Bank" consortium, which also aims to be an internet bank specialized for small business owners. On the 2nd, the consortium, consisting of 11 companies, held its own event to begin full-scale preparations for establishment.
The U Bank consortium includes online investment-linked finance company Lendit, fintech platform Javis & Villains (Samjeomsam), foreign exchange specialist fintech company Travel Wallet, medical AI (artificial intelligence) company Lunit, and Hyundai Marine & Fire Insurance. The financial institution aims to serve not only small business owners but also the elderly, SMEs, and foreigners.
Securing capital is crucial to passing the internet bank licensing process. The capital requirement for a new internet bank license is at least 25 billion KRW, which is lower than that of commercial banks (100 billion KRW). However, unlike commercial banks, internet banks are subject to government controls on the loan ratio to medium- and low-credit borrowers. At least 30% of total credit loans must be to customers in the lower 50% credit score bracket. Since loans are made to higher-risk borrowers, asset soundness is important.
In fact, in 2019, Soso Smart Bank failed to obtain a preliminary license. At that time, financial authorities judged it unqualified, stating, "The capital procurement plan and business plan were insufficient, and it appears unprepared to manage an internet bank stably."
This is why the Deojon Bank and U Bank consortia, which have secured financial investors, are attracting attention. The existing three internet banks also submitted license applications after securing financial investors. Kakao Bank partnered with Korea Investment Holdings and KB Kookmin Bank, and K Bank partnered with Woori Bank. Toss Bank completed its shareholder structure with Hana Bank, SC First Bank, Welcome Savings Bank, Hanwha Investment & Securities, and two capital companies before submitting its license application.
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