[1mm Financial Talk] 'Megi' Fades for Internet Banks, Finding a Way Out with Auto Loans?

Internet-only banks are seeking new opportunities by entering the auto loan market. Attention is focused on whether these internet-only banks, whose initial role as 'game changers' has recently diminished, can find a breakthrough in this market.

According to the financial sector on the 26th, KakaoBank recently launched a used car purchase loan product. The loan limit is up to 40 million KRW within the vehicle price, with an interest rate as low as 5.49%. A KakaoBank official stated, "It is expected to be more than 3 percentage points cheaper than the average interest rates of used car financial products offered by credit card companies." In fact, according to the Credit Finance Association's disclosure information portal, the average interest rates for newly issued used car financial products (general products) from June to August this year were 7.95% for KB Kookmin Card and 9.80% for Shinhan Card. Additionally, KakaoBank has entered the competition by offering a 100% waiver on early repayment penalties and enabling loan application and execution even on weekends. Starting with used car loans, KakaoBank is drawing a blueprint for expanding into new car auto financing. Moreover, with Hyundai Motor recently announcing its entry into the used car market, the market size appears to be growing.

K Bank also launched a 'car loan refinancing' product last month, allowing customers to refinance their entire auto loans taken out for new or used car purchases from credit card companies and capital companies to K Bank. Notably, loan execution is possible through the K Bank app without submitting separate documents such as the vehicle registration certificate or loan payoff certificate. Starting with the launch of the auto loan refinancing product, K Bank plans to expand to purchase financing loans within the year and will release a 'one-stop' service this year that enables everything from used car inquiry to auto loan execution for purchase in one go.

The reason KakaoBank, K Bank, and others are seeking new breakthroughs by entering the auto finance market is that commercial banks have rapidly undergone digital transformation, causing the initial 'game changer' role of internet-only banks to fade significantly. Furthermore, there has been much criticism that the differentiation from commercial banks has almost disappeared recently due to stable growth focused on mortgage loans. A senior official from an internet-only bank said, "Since commercial banks have almost caught up through digital transformation, it is difficult for internet-only banks to find new innovation points," adding, "That is why they are looking for opportunities in the auto loan market."

In fact, they are envisioning a 'big picture' through various auto-related service linkages. Since the automobile market includes finance and lifestyle sectors, they plan to expand into platform areas to find new breakthroughs. Another internet-only bank official said, "We are considering not only diversifying the loan portfolio but also expanding platform revenue (non-interest income) through various auto-related service linkages."

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