The approval process was also as quick and easy as the account opening. The ease of opening an account was not the only selling factor, KakaoBank also offered loans with interest rates that were as low as 2.86% compared to the 6-19% range of traditional banks. This is revolutionary as it saves the time and effort of visiting a bank, waiting in line and then filling out lengthy forms. Opening a bank account only took 5-7 minutes on average and the only document required was a photo of your ID card. It extended US$1.2 billion in credit loans during August and this again accounted for 40% of the country’s total loans during the month. If we only count the mobile internet based accounts it was almost a 70% share.
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We estimate KakaoBank took close to 45% market share in all new bank accounts opened in August – including both offline and online.
The number continued to rise throughout August. Within just 24 hours of opening on July 27 th 300,000 new accounts were opened with KakaoBank (this is more than what all other Korean banks got in 2016 through online channels). KakaoBank fully leveraged the advantage of being linked to the leading messaging platform in Korea, KakaoTalk which is used by 42 million users out of the 50 million population in Korea. All activities occur over the app which is a natural extension from its main messaging app KakaoTalk.
It has positioned itself as a mobile only bank with no physical branches. It is led by chat platform KakaoTalk which has a 10% stake but the major shareholder is Korea Investment Holdings, a major financial group in Korea. KakaoBank was established in January 2016. This will likely be a critical disruption to a sector that has enjoyed a long period of stability but has lacked innovation. It was designated as one of the two online-only banks in the nation.
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Messaging platform KakaoTalk has successfully entered the banking industry in Korea after obtaining a license from the regulator FSC in April this year. |By Jene Park How KakaoBank is bringing innovation to the banking industry, at last
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