Commercial Banks Also Join One After Another... Expanding Battle for the Fourth-Party Banking Market

As commercial banks express their willingness to participate, the competition for the fourth internet bank is expanding. There is growing interest in whether a new tectonic shift will occur in the internet banking system, which has been solidified by the current three giants: KakaoBank, K Bank, and Toss Bank.

IBK Industrial Bank announced on the 12th that it is considering joining the U Bank consortium. IBK Industrial Bank views this positively as it can contribute to realizing inclusive finance for small and medium-sized enterprises (SMEs) and small business owners.

The U Bank consortium includes online investment-linked finance company Lendit, fintech (finance + technology) platform Jarvis & Villains, Travel Wallet, and Hyundai Marine & Fire Insurance. On the same day, Hyundai Department Store, Daekyo, and MDM Plus also decided to invest. Kim Sung-jun, CEO of Lendit, stated, "Through collaboration with IBK Industrial Bank on inclusive finance strategies for SMEs, small business owners, and seniors, we expect to provide practical assistance to customers."

Currently, four groups have expressed their intention to apply for the fourth internet bank license, including U Bank, Duzon Bank, KCD Bank, and Soso Bank consortiums. Competition is intensifying as commercial banks are also positively considering participation in each consortium. Shinhan Bank is reviewing an equity investment in Duzon Bank, Woori Bank has submitted a letter of intent to invest in KCD Bank, and NH Nonghyup Bank is reportedly reviewing investment participation proposals from the fourth internet bank consortiums.

It is not unusual for commercial banks to show interest in internet banks. KB Kookmin Bank holds a 4.88% stake in KakaoBank, Woori Bank owns 12.6% of K Bank, and Hana Bank holds 8.97% of Toss Bank. However, while past involvement was mainly to learn from the innovations of internet banks, recent participation by commercial banks seems to focus more on operational collaboration.

In the case of Shinhan Bank, it expects to create synergy in corporate finance with Duzon Bank, which is promoted by Duzon Bizon, a company specializing in enterprise resource planning (ERP). Since Duzon Bizon has as many as 130,000 ERP client companies, it holds a substantial amount of SME data. A Shinhan Bank official said, "Because Duzon Bizon has a lot of corporate data, it can be an opportunity to study how finance can be integrated."

KCD Bank, which Woori Bank has submitted a letter of intent to invest in, is promoting specialized finance for small business owners. Korea Credit Data, which is pushing for the establishment of KCD Bank, operates 'Cash Note,' a management app used by about 2 million small business owners and self-employed individuals.

From the perspective of the consortiums preparing to launch the fourth internet bank, participation by commercial banks is crucial. A consortium official said, "The participation of commercial banks is necessary to learn from their experience and know-how in systems and operations."

Competition is expected to intensify once the financial authorities announce new licensing criteria for internet banks in the second half of the year. On the 13th, the Financial Services Commission will hold a seminar hosted by the Korea Institute of Finance to evaluate the performance of the three internet banks (KakaoBank, K Bank, Toss Bank). This comprehensive evaluation will assess whether competition within the banking industry has been promoted, financial convenience improved, and credit supply to medium- and low-credit borrowers adequately achieved. Based on the performance evaluation of the three banks, the Financial Services Commission plans to introduce new licensing criteria. The new criteria may include improvements regarding capital requirements, appropriateness of funding plans, and innovation in business plans.