Now a '100% Non-Face-to-Face' Mortgage Loan Competition... Banks Brace for a Fierce Battle to Differentiate Themselves

Woori Bank and KakaoBank Preparing for 'Fully Non-Face-to-Face' Service
Large Loan Amounts and High Repayment Possibility... Fierce Competition

[Asia Economy Reporter Kiho Sung] As big tech companies (large information and communication companies) gradually expand their presence in the financial sector, non-face-to-face competition is spreading to mortgage loans. Unlike unsecured loans, mortgage loans secured by housing involve complex paperwork and require personnel for due diligence. However, with fintech and big tech companies taking the lead in non-face-to-face services and commercial banks joining in, the competition is becoming increasingly intense.

According to the financial sector on the 25th, Woori Bank plans to launch a 100% non-face-to-face mortgage loan as early as this month. KakaoBank also plans to release a 100% non-face-to-face mortgage loan product by the end of this year at the latest.

With this, all five major commercial banks and internet-only banks now handle non-face-to-face mortgage loans. KB Kookmin, Shinhan, Hana, NH Nonghyup Banks, and K Bank are already selling non-face-to-face mortgage loan products. KB Kookmin Bank ignited competition by launching the ‘KB Star Mortgage Loan’ in February last year, which allows customers to check loan eligibility and amounts in advance through internet banking, followed by K Bank releasing a non-face-to-face mortgage loan product in August of the same year.

However, the market evaluates that the mortgage loans launched so far cannot be called ‘completely non-face-to-face.’ Although commercial banks handle both new and refinancing loans for non-face-to-face mortgage loans, administrative information consent forms and mortgage registration procedures are not conducted non-face-to-face, requiring visits to branches. K Bank operates a simplified non-face-to-face apartment mortgage loan requiring only two documents: registration certificates (land, building) and income verification documents, but it only handles refinancing loans, not new loans.

In response to these criticisms, Woori Bank and KakaoBank are preparing 100% non-face-to-face mortgage loan products. All properties with verifiable market prices, including apartments, row houses, and multi-family houses, will be eligible, and both new and refinancing loans will be available. K Bank is also reportedly conducting internal reviews to expand its non-face-to-face mortgage loan products, which are currently limited to apartment refinancing loans.

A Woori Bank official explained, "We are preparing to launch a non-face-to-face mortgage loan product as early as this month," adding, "We are currently finalizing the preparations." A KakaoBank representative also stated, "Although we are currently focusing on mid-interest rate products, we plan to launch a non-face-to-face mortgage loan product by the end of this year."

Regional banks are also joining the launch of non-face-to-face mortgage loan products. Busan Bank and Daegu Bank recently launched the ‘ONE Apartment Loan’ and ‘DGB Non-Visit Mortgage Loan (Living Stability Fund),’ respectively. Regional banks feel a sense of crisis as commercial and internet banks expand their domains with non-face-to-face mortgage loan products while their own sales power remains relatively weak.

The reason banks focus on non-face-to-face mortgage loans is that mortgage loans have larger loan amounts and higher repayment rates than other loans. Additionally, the activation of non-face-to-face services is expected to attract a large demand for housing funds from the mobile-savvy 20s and 30s age group. This is why fierce competition is expected in the financial industry to realize ‘more convenient non-face-to-face mortgage loans.’

An official from a bank said, "As COVID-19 spreads, more customers find visiting banks inconvenient," and added, "Demand for non-face-to-face mortgage loan services is growing, so banks are focusing on creating convenient services."

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