"Free Currency Exchange" Internet Banks, Why They Are Focusing on 'Foreign Exchange Services' [1mm Financial Talk]

Internet banks such as KakaoBank and Toss Bank have entered the foreign exchange service market in the banking sector. By introducing groundbreaking services like 'lifetime free currency exchange benefits' and 'dollar gifting,' they are igniting competition among banks. This move is interpreted as a strategic step aimed at long-term platform expansion rather than short-term profits.

KakaoBank's Dollar Box, launched on the 25th of last month, features a 'dollar gifting' function and a policy of waiving currency exchange fees. It has gained significant popularity, especially because users can gift dollars to their KakaoTalk friends, leveraging the nation's most popular messenger app. Additionally, it offers free currency exchange and domestic ATM (automated teller machine) withdrawal fees. A notable aspect is its partnership with Travel Wallet, a fintech company specializing in overseas payment services. Users can recharge Travel Wallet within Dollar Box, and with the Travel Pay card, payments and ATM withdrawals are free of charge in over 70 countries worldwide. According to KakaoBank, this service surpassed 100,000 subscribers within two days of its launch.

Toss Bank also introduced a foreign currency account in January. The Toss Bank foreign currency account can be used with the existing Toss Bank check card and allows real-time currency exchange for 17 currencies worldwide, 24 hours a day. Toss Bank is attracting users by boldly promoting a 'lifetime free' currency exchange fee policy. It has already exceeded one million accounts within 105 days of launch. Recently, Toss Bank added a service providing 'overseas restaurant rankings' to customers holding foreign currency accounts. This includes rankings of popular restaurants in Japan and a feature to locate ATMs within Japanese airports, with plans to expand to other countries in the future.

Fundamentally, foreign exchange services in the banking sector generate revenue through fees, but internet banks appear to be focusing more on customer acquisition than short-term profits. With the acceleration of digitalization, banks are expanding their platforms by offering various convenience services such as ID verification through their mobile apps. As non-face-to-face banking services expand, the number of app users and app engagement time are linked to long-term customer acquisition. Internet banks are aiming to attract customers through 'foreign exchange services.'

There is a strong belief that they must not lose leadership in the increasingly fierce competition in banking foreign exchange services, which began with Hana Financial Group's Travel Log service. Internet bank insiders say that the experience of convenient card use overseas is powerful, creating a 'lock-in effect' that leads to continued use domestically.

Moreover, foreign exchange services have advantages for future expansion into other businesses such as shopping and overseas travel partnerships. An internet bank official said, "As the number of customers increases, the platform's value rises, so growing the platform is important from the perspective of non-interest income. We plan to expand partnerships to offer services usable overseas, including shopping."