Woori Bank, a major South Korean commercial lender, has officially entered the competition to secure a license for the country’s fourth internet-only bank.
The bank confirmed that it had submitted a letter of intent to join the Korea Credit Data (KCD) led consortium.
This move marks the first time a local commercial bank has officially committed to the race for establishing an internet-only bank.
“Woori Bank has consistently supported local merchants and small business owners. We have decided to participate in the consortium for the fourth internet-only bank to contribute to fostering a financial ecosystem that empowers small business owners,” a Woori Bank official stated.
The consortium, tentatively named KCD Bank Consortium, is one of four groups vying for the new internet-only bank license, alongside contenders like U-Bank, Soso Bank, and Douzone Bank consortiums.
This follows the establishment of other internet-only banks in South Korea, including K bank, Kakao Bank, and Toss Bank.
KCD, known for operating the business solutions platform Cashnote, is a key player in small enterprise data, servicing 1.3 million micro-enterprises and providing management and credit information services to around 2 million small business owners.
In 2022, KCD also launched Korea Credit Information, the first credit agency specializing in individual businesses in the country.
If Woori Bank’s bid with KCD’s consortium is successful and secures the license, it will mark the commercial bank’s second investment in an online-only lender, having already acquired a 12.6 percent stake in K bank.
Industry experts note that collaboration with a commercial bank or a major financial institution will be crucial in securing the license.
Although the law requires a minimum capital of 25 billion won ($18.2 million) to establish an internet-only bank, insiders suggest that significantly more capital will be needed for effective operations.
Amidst these developments, Shinhan Bank is also considering an investment in the Douzone Bank consortium, initiated by enterprise resource planning software provider Douzone Bizon.
The Financial Services Commission announced in July 2023 plans to lower the entry barriers into the internet banking sector, prompting a surge in competition among potential entrants.
The Commission is currently reviewing revisions to the standards for license approval and is expected to announce updates soon.
This move aligns with Woori Bank’s strategic efforts to diversify its business portfolio.
The bank recently established a new committee dedicated to developing and promoting new businesses, directly overseen by CEO Cho Byung-kyu, which will manage the initiative once Woori officially joins the KCD Bank consortium.
