Kakao, the operator of South Korea's largest mobile messaging app, and telco KT Corp., have won approval from the Government to open the country's first Internet-only banks.
The winning bids were part of a three-way contest to stake a claim for the two banking licenses that were up for grabs from the country's Financial Services Commission, beating off competition from a consortium led by online retailer Interpark.
Kakao already has form in financial services. In November, the company teamed up with 16 banks to launch a mobile wallet service for online, offline and person-to-person payments. The firm partnered with Koookmin Bank, Chinese e-commerce outfit Tencent and online flea market eBay in its Internet bank bid.
KT's bid also mustered support from another Chinese e-commerce giant in Alibaba's Alipay, alongside Woori Bank, GS Retail, Hanwha Life Insurance and Danal Co..
The arrival of new Web banks in South Korea will "inject healthy competition in the local financial market and improve the financial industry,” Yim Jong Yong, chairman of FSC, said in a statement announcing the approval.