Targeting Personal Business Loans... Kakao, Toss, and K Bank Also Expanding Their Reach

Internet banks have begun to expand their presence by actively entering the corporate loan market, which was previously dominated exclusively by commercial banks.

According to the financial sector on the 7th, Toss Bank will launch loans for individual business owners within this month. This is the first launch among internet banks. Toss Bank will introduce a product exclusively for individual business owners using its own credit evaluation model. In the small and medium-sized business loan market, which mainly consists of secured loans such as guarantees and real estate, Toss Bank is differentiating itself with unsecured loan products. The minimum interest rate is in the low to mid 3% range per annum, with a limit of around 100 million KRW.

Kakao Bank also plans to enter the corporate loan market targeting individual business owners within this year. A Kakao Bank official stated, "We will diversify our loan portfolio, which is currently composed of household loans." Kakao Bank is also preparing to launch mortgage loans in the first quarter of this year. Testing is currently underway ahead of the official launch. The mortgage loans Kakao Bank is preparing will be 100% non-face-to-face.

K Bank has also set a strategy to strengthen its credit lineup by launching individual business owner loans this year. They plan to expand loans for medium- and low-credit borrowers through the establishment of specialized credit evaluation models. K Bank, which is preparing for an initial public offering (IPO), is focusing on external growth. Suh Ho-sung, CEO of K Bank, emphasized to employees, "We must firmly establish ourselves as a digital financial platform this year."

Internet banks have started to actively stretch out as regulatory policies by financial authorities have been eased. The Financial Services Commission announced last month that internet banks will be subject to the same loan-to-deposit ratio regulations as general banks after a three-year grace period, and that on-site inspections and face-to-face transactions with business owners necessary for corporate loan screening will be permitted. This has opened the door for internet banks, which previously only handled household loans, to enter the corporate loan market.

Moreover, the small and medium-sized enterprise and individual business owner loan market continues to grow steadily. As of the end of January, the outstanding loans for small and medium-sized enterprises (including individual business owners) from KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup banks totaled 559.7387 trillion KRW, an increase of 6.2601 trillion KRW from the previous month and 58.5997 trillion KRW from a year earlier. For individual business owner loans, the amount was 301.4069 trillion KRW, up 1.6854 trillion KRW from the previous month and 28.9232 trillion KRW from the previous year. An industry insider said, "For internet banks, securing new growth engines through small and medium-sized enterprise and individual business owner loans is possible, and it also allows for the expansion of medium-interest and medium-credit loans, which is a mission of the authorities, making it a win-win situation."

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