Toss Bank Launch Imminent... Who Will Win the 'Mid-Interest Rate War'?

Internet Banks Predict Fierce Competition in the Mid-Interest Rate Market

[Asia Economy Reporter Kiho Sung] Toss's internet-only bank, Toss Bank, has applied for a full license. If Toss Bank receives approval as early as March, it will begin full-scale operations in July. Accordingly, the domestic internet-only banking sector will be reorganized into a three-company system consisting of Kakao Bank, K Bank, and Toss Bank from the second half of this year, ushering in an era akin to the "Three Kingdoms." Intense competition is expected, especially in the mid-interest rate loan market.

According to financial authorities on the 13th, Toss Bank (Toss Innovation Preparation Corporation) recently applied to the Financial Services Commission for a full license as an internet-only bank. This comes one year after obtaining a preliminary license in December 2019. Toss Bank aims to receive approval in March, which would enable its launch in July. Previously, Kakao Bank and K Bank took about 2 to 3 months from applying for a full license to obtaining it, so there is little expected delay for a July launch.

Once Toss Bank begins operations in the second half of the year, the internet banking market will be reorganized into a "Three Kingdoms" structure. These companies have already begun preparing by recruiting personnel ahead of the competition. Toss plans to hire 330 employees by March, while Kakao Bank is on the verge of surpassing 1,000 employees. K Bank is also continuing to recruit relevant staff.

With the launch of Toss Bank, internet banks are expected to enter full-scale competition in the "mid-interest rate unsecured loan" sector. Toss Bank has consistently expressed its intention to focus on mid-interest rate loans. The Toss platform already has 18 million customers, and it is calculated that this data can be used for sophisticated credit evaluations. At the time of its preliminary license, Toss Bank announced plans to offer customized services for individual customers with medium credit ratings and small business owners.

Kakao Bank is accelerating the launch of products available to low- to medium-credit borrowers, in addition to the currently implemented Saetdol loans and private mid-credit loans. K Bank, which recently changed its leadership, also plans to introduce new products soon.

As a result, there is growing interest in whether internet banks will bring changes to the loan market with new business models. Until now, the mid-interest rate loan market has been concentrated among savings banks and credit card companies. However, with the full-scale advent of the Personal Credit Information Management Service (MyData) era, mid-interest rate loans by internet banks are expected to become more active.

On the other hand, there are concerns that challenges will also arise. Although internet banks will enter a full-fledged competitive system, the financial environment remains challenging until they become profitable. Due to tightened regulations on unsecured loans by financial authorities, the profits of internet banks are already decreasing. Moreover, credit evaluation for low-credit borrowers is not easy, so attention is focused on what solutions will emerge in this regard.

This content was produced with the assistance of AI translation services.