KakaoBank, Will It Enter a Second Golden Age with Personal Business Loans?

[Asia Economy Reporter Buaeri] KakaoBank is set to expand its portfolio by launching loans for individual business owners soon. Unlike its early days when it was seen as a 'disruptor' in the financial sector, KakaoBank has gradually been regarded as becoming more like a traditional commercial bank. The industry is now focused on whether KakaoBank will demonstrate innovation once again with its individual business owner loans.

According to KakaoBank on the 6th, preparations are underway to launch individual business owner loans as early as October, or by December at the latest. Although KakaoBank started later than Toss Bank and K Bank, it plans to offer differentiated services through its platform strategy. A KakaoBank official stated, "We are preparing services that not only include individual business owner loan products but also allow small business owners to manage their workplaces through the KakaoBank application (app)."

KakaoBank plans to introduce non-face-to-face products for individual business owners who find it difficult to visit branches, and will also implement an advanced credit evaluation model in collaboration with Korea Credit Information Services, a credit rating agency for individual business owners in which it holds a second-largest stake. Additionally, KakaoBank intends to offer deposit products alongside loans for individual business owners managing business funds.

Internet-only banks, which have maintained loan growth even amid rising interest rates, are expanding their scope by launching individual business owner loans. As of the end of August, the loan balances of KakaoBank, K Bank, and Toss Bank totaled 43.0991 trillion KRW, surpassing 40 trillion KRW. KakaoBank's loan balance increased by 248.7 billion KRW from the previous month to 27.1991 trillion KRW, K Bank's rose by 340 billion KRW to 9.5 trillion KRW, and Toss Bank's loan balance grew by 2.2 trillion KRW over two months to 6.4 trillion KRW.

In May, K Bank partnered with the Credit Guarantee Foundation to launch the 'Sajangnim Loan,' a guaranteed loan product for individual business owners. This is a 100% non-face-to-face product that does not require customers to visit branches. K Bank plans to continuously expand its corporate loan portfolio. In July, K Bank also recruited personnel for SME (small and medium-sized enterprises) loan product planning through an open career recruitment. Toss Bank was the fastest to launch the 'Sajangnim Loan' in February, and as of June, its loan balance exceeded 530 billion KRW, showing strong performance.

The corporate loan market is expected to play a crucial role in the quantum leap of internet-only banks, as it continues to grow despite rising interest rates. The combined corporate loan balance of the five major commercial banks (KB Kookmin, Shinhan, Hana, Woori, NH Nonghyup) reached 687.4271 trillion KRW at the end of August, an increase of 51.5393 trillion KRW compared to the end of last year. Notably, loans to small and medium-sized enterprises, including self-employed and small business owners targeted by internet-only banks, have steadily increased. Loans to individual business owners by the five major banks totaled 313.6373 trillion KRW at the end of August, up 1.2408 trillion KRW from the previous month (312.3965 trillion KRW), and increased by 13.9158 trillion KRW compared to the end of last year (299.7215 trillion KRW).

It remains to be seen whether KakaoBank, the frontrunner among internet-only banks, will find new momentum. Although KakaoBank was praised for financial innovation in its early days with convenient app usability, group accounts, and flexible savings products, it has faced criticism for lacking new features compared to the emergence of Toss Bank and improvements in convenience by commercial banks. Regarding this, Yoon Ho-young, CEO of KakaoBank, stated, "Individual business owner loans have limitless potential in non-face-to-face finance," and added, "We will continue to innovate in the field of individual business owner loans."

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