[Why&Next] At a Crossroads: Will the 4th Internet Bank Be Derailed or Revived?

Concerns Rise Over Delays in Approval Process, Fears of Project Being Derailed
Positive Outlooks Suggest Lee Administration May Accelerate Progress as It Is a Key Policy Pledge

The preliminary approval review process for the fourth internet-only bank (the so-called "4th Internet Bank") is taking longer than expected, leading to various speculations. Some are concerned that the establishment of the 4th Internet Bank, which was promoted under the previous Yoon Suk-yeol administration, may be at risk of being derailed due to the change in government. On the other hand, there are also positive outlooks that the new administration could see this as an opportunity, as it has pledged to expand mid- and low-credit lending by internet banks and to establish a specialized internet bank for mid-rate loans. Amid ongoing controversies, including the withdrawal of strong candidates even before the preliminary approval application, attention is focusing on the potential launch of the 4th Internet Bank.

Delayed Preliminary Approval Review: Is the 4th Internet Bank at Risk?

According to the financial sector on June 12, the Financial Supervisory Service has reportedly not yet finalized the schedule for the "external evaluation committee" that will review the preliminary approval for the 4th Internet Bank. Previously, at the end of March, the companies participating in the 4th Internet Bank completed their applications for preliminary approval. As the results are supposed to be announced within 60 days of the application, the outcome should have been released by the end of May, or at the latest, by the beginning of this month.

The preliminary approval review process for the 4th Internet Bank consists of three stages. The process is finalized through the Financial Supervisory Service, the external evaluation committee under the Financial Supervisory Service, and the resolution of the Financial Services Commission. After the Financial Supervisory Service reviews the candidates' documents, the external evaluation committee, composed of experts in eight fields, conducts an evaluation. Based on this, the Financial Services Commission announces the final results. Currently, the Financial Supervisory Service is reviewing whether applicants such as Korea SOHO Bank, Soso Bank, Podo Bank, and AMZ Bank, which submitted their preliminary approval applications in March, meet the requirements, while also working to supplement any necessary documentation.

However, as the process has shifted to the Lee Jae-myung administration, the possibility of a change in leadership at the Financial Services Commission, which is the responsible ministry, is causing delays beyond the expected schedule. There are growing concerns that the 4th Internet Bank may be at risk, as the financial authorities are reportedly not expediting the practical work on the preliminary approval review.

There is also speculation that, as the Lee Jae-myung administration is rapidly pushing for the establishment of a "bad bank" to resolve the debts of small business owners, the establishment of the 4th Internet Bank may be pushed down the list of priorities.

Lee Administration Focuses on 'Small Business Owners'... Could This Be an Opportunity for the 4th Internet Bank?

Since President Lee Jae-myung has made the establishment of a specialized internet bank for mid-rate loans targeting small business owners and other financially vulnerable groups a key pledge, there are positive expectations that this could actually be an opportunity for the 4th Internet Bank.

President Lee has also pledged to raise the mandatory lending ratio to mid- and low-credit borrowers for existing internet banks. However, the financial authorities have reportedly not yet decided whether to apply the raised mandatory lending ratio to mid- and low-credit borrowers in this preliminary approval review, or to pursue the establishment of an additional internet bank separately from this review.

In fact, Kim Byunghwan, Chairman of the Financial Services Commission, stated at a regular press briefing with reporters at the Seoul Government Complex on May 7, "The review will proceed as scheduled," adding, "Given that public sentiment is not favorable toward the current profit-making methods of the banking sector, and there is a consensus on the need to promote competition in the banking industry, I believe that as long as a fair review is conducted, there is no reason to reverse the process."

An official from the financial sector said, "Regardless of which administration promoted the 4th Internet Bank, both ruling and opposition party candidates share a consensus on the need for financial support for small business owners, so this issue will not simply disappear." The official added, "In fact, given the strong public demand for restoring livelihoods, the process may even be expedited."