South Korea-based Viva Republica, a Fintech firm that developed Toss, a financial services platform, has been given preliminary approval for an online banking license from the Financial Services Commission of Korea, according to a December 16 release.
SG Lee, CEO at Viva Republica, stated:
“Toss has … become … [a widely-used] … financial app in Korea. With a digital bank license, we will be able to broaden our product offering … so that we can accelerate our mission to innovate the financial industry.”
Introduced in 2015, Toss is now the only Fintech unicorn (a startup with a valuation of at least $1 billion) in Korea. The firm’s digital banking operations are scheduled to begin operating during the first half of 2021, after it receives the final approval for a license.
A digital banking license will allow Toss to provide a wide range of financial services to consumers and companies. Describing itself as a “challenger bank for the underbanked,” Toss says it will provide banking solutions to individuals with thin files and mid-range or average credit scores.
Established in 2013, Viva Republic first introduced Toss as a peer-to-peer (P2P) funds transfer service. Toss Bank is now set to become the third digital bank in South Korea that will operate without a physical branch. South Korea’s K Bank and Kakao Bank are two internet-only banks that were launched in 2017.
With a valuation of approximately $2.2 billion after a $64 million round in August 2019, the Toss app has now been downloaded over 30 million times and reportedly has more than 16 million registered users, which is notably over 20% of South Korea’s population.
In 2018, Kakao Bank and K Bank experienced losses of around 21.2 billion won (appr. $18 million) and 79.7 billion won (appr. $68 million) respectively, data from the Korea Federation of Banks shows.
In October 2019, South Korea began an open banking pilot program. The nation’s government stated that it would run the testing phase and then determine whether changes are needed to improve system performance. The system is expected to be released to Fintech companies by December 18.