From Personal Business Loans to Mortgage Loans... Internet Banks Accelerate Their Pace

Tobank Launches First Internet Bank Loans for Sole Proprietors
KakaoBank to Start Mortgage Loans from 22nd... Competition via Mobile and Non-face-to-face
KakaoBank Lowers Loan Interest Rates and Raises Savings Interest Rates

[Asia Economy Reporter Minwoo Lee] Internet-only banks, which heavily relied on personal credit loans, are now actively expanding into areas traditionally dominated by commercial banks, such as personal business loans and mortgage loans. With the slogan "simple and easy loans," rapid growth is expected, leading to intense competition in lending.

According to the industry on the 20th, Toss Bank resumed new credit loans this year and on the 14th became the first internet-only bank to start loans for personal business owners, including self-employed and small business owners. The product, called "Toss Bank President Loan," offers a maximum loan limit of 100 million KRW, with a minimum application amount starting from 1 million KRW. The interest rates are set between a minimum of 3.54% per annum and a maximum of 15% per annum. Due to the nature of internet banks, the entire loan process from application to execution is conducted non-face-to-face. Qualification documents such as business registration certificates and income statements can be submitted through the Toss mobile application.

Kakao Bank will launch the "Kakao Bank Mortgage Loan" starting on the 22nd. It handles new home purchase funds, refinancing of existing mortgage loans, and living stabilization loans for apartments in the metropolitan area with a market price of 900 million KRW or less (based on KB market prices). The maximum loan amount available is 630 million KRW.

The entire process is also conducted non-face-to-face. Furthermore, consultations are carried out via an artificial intelligence (AI) chatbot. Users can interact with it just like chatting on KakaoTalk. While implementing the familiarity of in-branch consultations on mobile, the document submission process has been greatly simplified. By submitting a photo of the real estate sales contract, Kakao Bank, with customer consent, directly verifies the remaining required loan documents by connecting with relevant institutions. In the second half of the year, they plan to launch a ‘Personal Business SOHO Loan’ targeting small businesses and small business owners.

K Bank plans to launch personal business loans such as "Personal Business Operating Funds Loan" in the first quarter of this year. Initially, they will release guarantee-based products in cooperation with the Credit Guarantee Foundation, followed by credit-based products. Recently, they decided to lower the interest rate of fixed-rate apartment mortgage loan products by 0.5 percentage points (p) within a 100 billion KRW limit. As a result, the lowest interest rate for fixed-rate products dropped to 3.50% per annum. This move is interpreted as targeting refinancing demand from existing borrowers. Alongside this, interest rates on savings and time deposit products were raised by up to 0.3 percentage points.

As financial authorities have strengthened household loan management since last year, personal credit loans, which were the main focus, have slowed down, prompting internet-only banks to seek new avenues. An industry insider said, "Internet-only banks, feeling the limitations of household loans alone, are diversifying their business into mortgage loans and personal business loans, which were areas of commercial banks," adding, "intense competition with commercial banks is expected in these markets."

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