K Bank Joins the Battle... Fierce Competition Over Internet Bank Personal Business Loans

[Asia Economy Reporter Bu Aeri] Internet-only banks are expected to compete fiercely over loans for individual business owners. Following Toss Bank, K Bank is also about to launch its product, and Kakao Bank is actively preparing individual business owner loans.

According to the banking sector on the 14th, K Bank will launch an individual business owner loan product as early as this month. Earlier, in March, K Bank signed a Memorandum of Understanding (MOU) with the Korea Credit Guarantee Fund to launch individual business owner loans. They are building an integrated electronic guarantee system and a non-face-to-face guarantee system to enable evaluation, loan application, and deposit for individual business owners all at once, 100% remotely.

Toss Bank was the first internet-only bank to launch the "Sajangnim Loan" in February. The Sajangnim Loan is the first non-face-to-face individual business owner loan introduced by Toss Bank among internet-only banks. Toss Bank's Sajangnim Loan grants credit limits based on individual credit without requiring guarantees from guarantee institutions or collateral such as customers' real estate. Even if sales are not large, those with a certain annual income or steady sales can be recognized as having higher creditworthiness compared to businesses with high income over a short period. Within a month and a half of launch, the loan product balance reached 200 billion KRW.

Kakao Bank also plans to release an individual business owner loan product in the second half of this year. A Kakao Bank official said, "Benefits for valuable business owners or small-scale business owners who were not properly evaluated by commercial banks may improve."

Internet banks have begun to actively expand as financial authorities have eased regulatory policies. In January, the Financial Services Commission applied the same loan-to-deposit ratio regulations as general banks to internet banks after a three-year grace period and allowed on-site inspections and face-to-face transactions with business owners necessary for corporate loan screening. This has opened the way for internet banks, which previously only handled household loans, to enter the corporate loan market.

Moreover, corporate loans including individual business owner loans are on the rise. Banks are focusing on corporate loans due to strengthened household loan regulations, and loan demand has increased due to the prolonged COVID-19 pandemic. According to the financial market trends announced by the Bank of Korea, last month, individual business owner loans in the banking sector increased by 2.6 trillion KRW to 433.3 trillion KRW.

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