South Korea’s most popular internet-only bank, Kakao Bank said Thursday that it is preparing to go public around 2020 as a way to expand capital at the pace of the fast-growing mobile banking business.

“It may be a little premature at this point but we are always keeping a close watch on the need for capital expansion, considering the fast development pace of the mobile service sector,” said Yoon Ho-young, one of the co-chiefs, at a media briefing marking the first anniversary of the bank’s establishment.

“An initial public offering would be one of the plausible solutions to respond to such situations.”

After expanding its business horizons throughout this year and up until early next year, the bank will start preparing for the IPO procedures in incremental steps in 2019-2020, before taking tangible actions in 2020 or afterwards, according to the other co-chief Lee Yong-woo.
 

Kakao Bank, affiliated with the nation’s most popular mobile messenger app KakaoTalk, was launched on July 27 last year with starting capital of 300 billion won ($267.7 million), an amount that jumped to 1.3 trillion won in April this year upon a second capital increase.

The number of customers who had opened accounts was 6.3 million as of Sunday, and the total in savings and installment savings accounts stood at 8.63 trillion won. The loan balance was 7 trillion won as of the end of June, of which 1.34 trillion won, or 21 percent, was granted to low-credit customers with a credit rating of grade 4-7, officials said.

A recently launched service was the rent deposit loan, which allows tenants to borrow their real estate rent deposit via a mobile channel. Since its introduction in January this year, 47 percent of users have submitted the required documents and 67 percent signed loan agreements during nonbanking hours.

“As we told you just a year ago, inconvenience has been our inspiration,” Lee said.

“Everything that we have done over the past year was centered on the belief that banking services should evolve as to optimize customer convenience, not the other way around.”

Being a brand new player in the field, Kakao Bank had the advantage of building an information technology-focused business model from scratch, officials added.

“Some 40 percent of our employees are IT developers, which that technology is an essential part of our business competitiveness, not something that may be outsourced,” Yoon said.

The internet-only bank is currently operated on a Linux-based open source platform, making it a rare case in the banking industry. 

Facing its sophomore year, Kakao Bank pledged to reinforce its overseas remittance functions and loan services for low-credit score holders.

In partnership with Western Union, the world’s largest money transfer network service, the bank plans to introduce a remittance service in the first quarter of next year, allowing customers to send money overseas via their mobile device within 30 minutes with fees that are 30-70 percent cheaper than in conventional banks.

Seeking to expand the value of “inclusive banking,” it will be presenting a series of new loan products for those who find problems in borrowing money from major lenders.

Customers who have had a loan application rejected by other banks and even Kakao Bank may seek for alternative loan possibilities via affiliated nonmonetary institutions, starting from the fourth quarter this year. The bank is also currently working on establishing its own credit scoring system, aiming at launching a midrange interest credit loan product early next year.

“This industry needs to face a paradigm shift from ‘bank’ to ‘banking,’ which means that that customers would no longer depend on banks but actively seek for their own solutions,” Lee said, citing the event’s slogan “Beyond Bank.”

“We hope that our innovation and challenge may contribute to advancing such future (of the banking business).”

By Bae Hyun-jung (tellme@heraldcorp.com)