The internet–only Kakao Bank, backed by a domestic Internet company, Kakao Corp, the provider of the country’s most widely used digital messenger platform “Kakao Talk”, has drawn more than 1 million accounts since July 27 launch.
In addition, its mobile app has been downloaded more than 1.5 million times accepting 344 billion won ($306.6 million) in deposits and issuing 323 billion won in loans.
Kakao Bank claims that it would have opened even more accounts if there were no delays caused by the excessive traffic it experienced.
Kakao Corp. was one of two firms to win approval in 2015 from the government to open the digital-only bank.
The other provider, South Korea’s telecom company KT Corp, launched K-Bank in April. However, this bank can’t be compared with Kakao in terms of popularity, as it has signed up just 600,000 users even though it has been launched several months earlier.
Being invested in by Tencent and Ebay together with China’s Ant Financial, which pumped $200 million into the Kakao Pay mobile finance subsidiary, Kakao Bank poses threat to such brick-and-mortar lenders as KB Kookmin, Shinhan, KEB Hana, Woori, and NH Nonghyup banks in consumer banking.
The bank enables account opening via the app—without visiting a bank branch—using a mobile phone number and an ID. Also it offers low overseas transfer fees, making it attractive to foreigners who regularly use international banking services.
And here the problem arises: around 2 million foreigners were locked out from registering because they could not receive a verification code.
“According to the FAQ section, foreigners can’t use this app/bank because we wouldn’t be able to receive a verification code on our phones,” a foreigner’s review on the Kakao Bank app said.
It’s extra frustrating because a 90 percent discount in overseas transfer fees would benefit us far more than anyone else, so why would they want to alienate us from their service?
As provided by Kakao spokesperson, it is not possible to use foreign registration card for identification taking in consideration current guidelines. Passports are also an invalid form of identification because non face-to-face identity verification is not yet available in Korea. A major commercial bank in Korea and the Financial Supervisory Service also says that passport verification is a tricky thing because it isn’t yet possible to confirm a passport’s authenticity.
After all, country’s major credit card companies are keeping an eye on the internet-only bank with rapidly increasing number of cards issued.
It is to note that owing to growing demand for Kakao Bank services, shares of Kakao Corp. finished Monday at 120,000 won, which is not only 9,000 won or 8.11 percent higher than the previous session, but also a record rate within last 52 weeks.