Fintech innovation

Kakao Bank's accounts top 10 million in two years of launch

The number of people who have Kakao Bank accounts has exceeded 10 million, according to Korea's second internet-only bank, Thursday. The bank, which opened July 27, 2017, has attracted one in five Koreans as a customer in just two years. Kakao Bank's customer number far exceeds the 7.32 million of Rakuten, a Japanese internet-only bank launched in 2001.

Kakao Bank has brought about astonishing changes to Koreans' financial lives. Most notable is that the extending and receiving of credit have become possible without consumers visiting banks. People can also send and transfer money without going through convoluted log-in procedures or issuing certificates. All these show that innovation is making people's lives more convenient.

Internet-only banks were established to open the way for ICT firms to jump into the financial business and bring some fresh air to the stagnant industry. It was not easy, however, to give rise to a new financial player that could stimulate existing ones because of layer after layer of regulations. Kakao Bank has also walked a bumpy road over the past two years. A special law that allows a non-financial shareholder to take up to a 34 percent equity share went into effect only this year.

It is quite an accomplishment therefore that the bank has reached 10 million customers. Its rapid growth is attributable to the combination of existing financial services with "ICT DNA." About 40 percent of the bank's executives and employees are from the ICT sector, making its fusion and innovation possible.

For Kakao Bank to leap to become an even more innovative internet bank, Kakao Corp., the operator of the nation's dominant messaging app Kakao Talk, should play a leading role. Kakao Corp. will be able to buy out 41.6 million shares owned by Korea Investment Holdings to increase its equity share to 34 percent, but only if it surmounts the hurdle of fit and proper testing.

The financial authorities should clearly see how Kakao Bank has made such a breakthrough. Now is the time to eliminate regulations to allow many internet-only banks to compete with one another and start the fintech revolution.