Kakao Bank, South Korea's second Internet-only bank, began commercial operations Thursday with the aim of attracting more customers with lower borrowing costs and higher interest.
Consumers can open an account at Kakao Bank, led by Kakao Corp., operator of the country's dominant messaging app KakaoTalk, by downloading an application on their smartphones and verifying their personal information through the Internet, according to bank officials.
It offers ordinary deposits, time deposits and card loans with more favorable interest rates than the ones offered by traditional lenders, along with commission discounts for withdrawal and remittance.
The company also provides easier money-transfer service through its mobile messenger KakaoTalk.
Such convenience and better financial terms are expected to appeal to local customers as the country's first online bank, K-Bank, gained wide popularity following its launch in April.
South Korean financial authorities introduced Internet-only banks to the long-slumped banking sector to reinvigorate the industry by attracting investment from information technology businesses.
Kakao's consortium also includes Kookmin Bank, eBay Inc. and China's Tencent Holdings Ltd., while K-Bank is formed by a consortium of KT Corp., Woori Bank and 19 other companies.
"The government will give full support to help new players, such as Internet-only banks, do business in a creative way in the market," Financial Services Commission Chairman Choi Jong-ku said in the launching ceremony of Kakao Bank, adding that the regulator will lower entry barriers to the new financial market to boost the financial sector and the entire economy.
He said online banks will also contribute to expanding financial services to the needy as they provide cheaper borrowing costs to those who are isolated from conventional banking services due to lower credit.