[Why&Next] Kakao Bank Going Overseas, Will It Become a 'Meggi' in Southeast Asia Too?

First Overseas Investment Destination Indonesia
Launch of Digital Bank 'Superbank'
Targeting Untapped Market Thailand
Full-Scale Strengthening of Global Capabilities

KakaoBank has officially begun its overseas expansion, focusing on Southeast Asia. When KakaoBank first appeared in 2017, it brought a fresh shock to the domestic banking sector by introducing innovative products such as mobile banking with enhanced accessibility, group accounts, and 26-week installment savings. However, after seven years, it has been criticized for showing growth patterns similar to traditional banks, losing much of its initial freshness, and KakaoBank itself is now at a critical point where new growth avenues are urgently needed.

Launch of 'SuperBank' with Southeast Asia's Largest Super App 'Grab'

According to KakaoBank on the 24th, the first overseas investment destination, the Indonesian digital bank 'SuperBank,' officially launched last week. SuperBank is an Indonesian digital bank with major shareholders including Southeast Asia's largest super app 'Grab,' the local largest media company 'Emtek,' and 'Singapore Telecommunications (Singtel).' KakaoBank also made a 10% equity investment in SuperBank last year.

Generally, entry into the Indonesian market is mainly done through mergers by acquiring small-scale banks. KB Kookmin Bank also entered Indonesia by acquiring Bank Bukopin in 2018. KakaoBank's approach is considered unusual as it declared its Southeast Asian expansion through a partnership with Grab, differing from the traditional method. Particularly meaningful is that Grab, which holds strong influence in mobility and delivery services in Southeast Asia, chose KakaoBank as its partner. It is known that KakaoBank invested significant time and effort to collaborate with Grab.

SuperBank is characterized by leveraging the 'Grab' ecosystem. Grab started as a taxi-hailing app and expanded its services to cover all aspects of daily life, including shopping, reservations, payments, and food delivery. Users can open a SuperBank account directly through the Grab app, and link their SuperBank account as a payment method for various Grab services such as GrabFood and GrabBike.

KakaoBank is collaborating on the user interface (UI), user experience (UX) innovation, product, and service planning of SuperBank by leveraging its strengths. In fact, SuperBank launched a piggy bank product called 'Celengan,' which automatically saves small amounts and balances daily, borrowing the idea from KakaoBank's 'Piggy Bank.' Reflecting the local Indonesian culture that values chickens, the piggy bank image shows a chick growing into a chicken as the balance accumulates.

A KakaoBank official said, "We will contribute to the development of local financial technology through KakaoBank's unique mobile financial technology capabilities and strategic partnerships based on them," adding, "We will gradually expand our business foundation, including building a global digital bank network."

Yoon Ho-young, CEO of Kakao Bank (left), and Arsid Nandawidaya, CEO of SCBX, are posing for a commemorative photo at the signing ceremony of the "Business Agreement for Obtaining a Virtual Bank License in Thailand," held on June 15 last year at the SCBX headquarters located in Bangkok, Thailand.

Overcoming the 'Barren Land' of Thailand

KakaoBank also accelerated its entry into Thailand by signing a business agreement with SCBX, a major financial holding company in Thailand, in June last year to obtain a virtual bank license. SCBX is a major financial holding company in Thailand that owns Siam Commercial Bank (SCB), one of the top three banks in Thailand. It is known that SCBX highly valued KakaoBank's innovative digital banking case and requested collaboration first.

The two companies are cooperating at every stage from consortium formation to license acquisition and establishment preparation, building a virtual bank consortium. Thailand's financial authorities recently announced plans to issue virtual bank licenses and are expected to accept applications in August. KakaoBank plans to acquire more than 20% of the shares in the future virtual bank consortium, securing the position of the second-largest shareholder.

Thailand has long been considered an impregnable region for domestic financial companies. During the 1997 Asian financial crisis, domestic banks that had entered Thailand withdrew en masse despite the Thai government's requests to stay, which strained relations and made subsequent entry difficult. A senior banking official said, "The difficulty for overseas subsidiaries to operate is mainly due to the challenge of building relationships with local authorities."

However, KakaoBank has an advantage in partnering with SCBX, a local financial holding company. Recently, China's 'WeBank' also joined the consortium. WeBank has 350 million customers and provides services based on China's national messenger 'WeChat.' Since Chinese-Thais make up 10% of Thailand's population and many Thais are familiar with WeChat, WeBank's participation is expected to be a positive factor.

Mid-sized Banks Also Accelerate Overseas Expansion

Until now, establishing or acquiring overseas banks was considered the exclusive domain of large banks, but recently, following KakaoBank's example, mid-sized and non-bank financial companies are also expanding overseas.

BNK Financial Group's subsidiary BNK Capital established a local corporation in Kazakhstan in 2018 and this year obtained a preliminary banking license from local financial authorities. It is the first time in 15 years that a foreign financial company has obtained a preliminary banking license in Kazakhstan. It is also the first case of a Korean financial company in the overseas microfinance market receiving a preliminary banking license.

BNK Financial plans to develop a business strategy specializing in small and medium-sized enterprise loans rather than full banking services based on thorough research of the Kazakhstan market during the main license acquisition process. It is also expected to provide financial services to Korean companies entering Kazakhstan in key economic cooperation sectors such as minerals, energy, and trade, as well as local companies.

Non-bank financial company Hanwha Life recently decided to enter the local banking market by acquiring a 40% stake in Indonesia's Nobu Bank. This is the first time a domestic insurance company has acquired shares in an overseas bank, and Hanwha Life will enhance its status as a comprehensive financial group by operating banking business alongside existing life and non-life insurance businesses.