Toss Bank Launch Imminent... Intense Battle for 2nd Place Begins Among Internet Banks (Comprehensive)

Anticipated Battle for 2nd Place with K Bank
Customer Acquisition and Product Competitiveness Are Key

[Asia Economy Reporter Kiho Sung] Toss Bank is set to enter the internet-only banking market as the third bank as early as the end of this month, turning the previously two-player market of Kakao Bank and K Bank into a three-way competition. Industry experts expect that the entry of the third internet bank will intensify market competition. In particular, while Kakao Bank is taking the lead, K Bank and Toss Bank are expected to engage in a fierce battle for second place.

According to the financial sector on the 4th, as of the end of last month, Kakao Bank had 17.17 million customers, with deposits and loans amounting to 27.7586 trillion KRW and 24.5133 trillion KRW, respectively. Although K Bank has been rapidly growing recently, it still lags far behind Kakao Bank with 6.45 million customers, 11.45 trillion KRW in deposits, and 5.72 trillion KRW in loans.

For this reason, the industry anticipates that Toss Bank will compete with K Bank once it launches. The investment community shares a similar view. Recently, global investment bank Morgan Stanley conservatively valued K Bank at 8 trillion KRW. This is comparable to the 8.2 trillion KRW valuation investors gave to Toss Bank’s parent company, Viva Republica, in June.

For Toss Bank to succeed, securing users, competitiveness of deposit products, and loan expansion strategies are considered key factors. The most urgent task is how many customers it can attract in a short period. The competitive landscape of internet banks is such that the number of customers directly translates into competitiveness.

First, Kakao Bank, which is currently in first place, recorded 14.03 million monthly active users (MAU) in the second quarter of this year. This is the highest level in the financial sector. Toss also boasts 11 million MAU, not far behind Kakao Bank. Therefore, the initial success of Toss Bank will likely depend on how many customers it can attract from Toss’s 11 million MAU.

Along with this, the competitiveness of deposit and loan products is also crucial. Both Kakao Bank and K Bank have previously attracted customers by offering higher interest rates compared to other financial institutions immediately after their launch. Although rising interest rates may become a burden, attractive interest rate products are essential to secure competitiveness early on.

With tightening loan regulations, how much Toss Bank can attract loans from low- to mid-credit borrowers is also a challenge. Toss Bank has set a goal with the Financial Services Commission to achieve a 30% share of loans to low- and mid-credit borrowers this year, increasing to 44% by 2023. This far exceeds Kakao Bank’s 30% and K Bank’s 32%. Since the market for low- to mid-credit loans is not large, the industry is paying close attention to how Toss Bank will target this segment using advanced credit evaluation models.

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