Messaging platform KakaoTalk has successfully entered the banking industry in Korea after obtaining a license from the regulator FSC in April this year. It was designated as one of the two online-only banks in the nation. This will likely be a critical disruption to a sector that has enjoyed a long period of stability but has lacked innovation.
KakaoBank was established in January 2016. It is led by chat platform KakaoTalk which has a 10% stake but the major shareholder is Korea Investment Holdings, a major financial group in Korea. It has positioned itself as a mobile only bank with no physical branches. All activities occur over the app which is a natural extension from its main messaging app KakaoTalk. KakaoBank fully leveraged the advantage of being linked to the leading messaging platform in Korea, KakaoTalk which is used by 42 million users out of the 50 million population in Korea.
Within just 24 hours of opening on July 27th 300,000 new accounts were opened with KakaoBank (this is more than what all other Korean banks got in 2016 through online channels). The number continued to rise throughout August. We estimate KakaoBank took close to 45% market share in all new bank accounts opened in August – including both offline and online. If we only count the mobile internet based accounts it was almost a 70% share. It extended US$1.2 billion in credit loans during August and this again accounted for 40% of the country’s total loans during the month.