Unicorn-Led Small Business Bank Emerging...? Eyes on KCD

Korea Credit Data's Strengths in Real Data and Credit Evaluation for Small Business Owners
Preliminary Approval Applications for New Internet-Only Bank to be Accepted on the 25th and 26th

As the preliminary approval application for the 4th internet bank approaches, attention is increasingly focused on Korea Credit Data (KCD), which leads Korea SoHo Bank. This follows the decisions of Deozon Bank and U Bank, which had formed a three-way competition with the Korea SoHo Bank consortium, to not participate in the preliminary approval application. Amid this, major financial companies are joining the Korea SoHo Bank consortium one after another, solidifying the 4th internet bank approval race into a de facto single-strong structure. If Korea SoHo Bank receives final approval, it will become the second case of a bank led by a unicorn company that started as a domestic startup, following Toss Bank.

According to related industries and the financial sector on the 21st, KCD is conducting the final procedures for the new preliminary approval application for an internet-only bank scheduled for the 25th to 26th. Earlier, Deozon Bank and U Bank, which were considered strong candidates, declared that they would not participate in the preliminary approval application next week, drawing attention to Korea SoHo Bank's decision. The reasons given by Deozon Bank and U Bank for not applying for preliminary approval were 'platform business strategy readjustment' and 'unstable economic and political situation,' respectively. In response, a KCD official said, "If a consortium wants to receive preliminary approval, it is natural to prepare according to the schedule and criteria announced by the authorities," adding, "It is inappropriate to blame external circumstances."

Korea SoHo Bank Homepage

Even as competitors withdraw one after another, KCD continues to reveal shareholders joining the consortium, showing confidence. The Korea SoHo Bank consortium has officially confirmed participation from a total of six financial companies, including four banks. The banks participating are Woori Bank, NH Nonghyup Bank, BNK Busan Bank, and OK Savings Bank, while non-bank financial companies include Eugene Investment & Securities and Woori Card. IT companies Megazone Cloud and ITCEN are also participating. Additionally, Hana Bank is reviewing consortium participation and is expected to decide on joining soon.

The background for the participation of major banks is analyzed to be a positive evaluation of KCD's competitiveness in the small business sector, which leads the Korea SoHo Bank consortium. Founded in 2016 by Kim Dong-ho, the founder of Open Survey, KCD provides the management service 'Cash Note' for small business operators and became a 'unicorn' company with a corporate value of 1 trillion won in 2022. Cash Note started as a bookkeeping and sales management app and now offers services including management, financial services, goods purchasing, and community. The number of small business stores using Cash Note reaches 1.7 million nationwide. Furthermore, KCD supplies services to 2.3 million business sites nationwide through its community companies, including Korea Payment Networks, a specialist in online and offline payments; I'm U, a POS and kiosk specialist; and Korea Credit Information, a credit rating agency for sole proprietors.

In particular, the credit evaluation capability for small business owners is a differentiated competitive advantage emphasized by Korea SoHo Bank. Korea Credit Information, established by KCD, is a credit rating agency specializing in sole proprietors and provides credit evaluation models to numerous financial institutions based on the business information of individual business owners. This credit evaluation model has been recognized for its excellence, having attracted new investment from Hana Bank this year, as well as investments from six banks including KB Kookmin Bank, iM Bank, IBK Industrial Bank, JB Jeonbuk Bank, and Kakao Bank. This means that when operating a small business bank, it is possible to grasp real-time sales and business status and have a credit evaluation model that can verify this.

Regardless of this situation, there are opinions that the approval for an internet-only bank may not be granted. The Financial Services Commission receives preliminary approval applications and then conducts evaluations by a private external evaluation committee and reviews by the Financial Supervisory Service over 2 to 3 months, before deciding on preliminary approval at a regular meeting of the Financial Services Commission. There is speculation that if the political situation, which requires an early presidential election after the impeachment trial, becomes entangled, decision-making could be postponed to the next government.

Nevertheless, KCD has expressed its determination to complete the process. Shin Seo-jin, Managing Director in charge of the KCD SoHo Bank TF, said, "Currently, all preparations are entering the final stage, and all participating companies are joining forces to launch the country's first 'bank for small business owners,'" adding, "We plan to sequentially disclose major shareholders until the submission of the approval documents."