Tech firms may soon be allowed to own internet-only banks in South Korea

A bill is paving the way for tech firms to be the largest shareholders.

South Korea’s financial regulator has submitted a bill to the National Assembly that would allow technology firms like Nexon Co., Naver Corp., and Netmarble Games Corp. to become the top shareholder in an Internet-only bank, reports Yonhap News Agency.

Also read: South Korea to allow payment via QR code by 2019

The country imposes strict restrictions on the amount of shares non-financial firms can hold in commercial banks as such entities must first secure the clearance of the Korean Financial Services Commission if it wishes to hold more than 4% of voting stock in an Internet-only bank.

But the legislation would pave the way for broadband internet operator KT Corp., which operates one of the two Internet-only banks in the country K-Bank, to increase its stake in the lender, sources told Yonhap.

Big companies operating in non-technology business sectors would not be allowed to own the largest stake in an Internet-only bank, according to Choi Jong-ku, chairman of the Financial Services Commission (FSC).

South Korea’s other Internet-only bank is Kakao Bank. Both launched in 2017, the Internet-only lenders have been capitalising on the popularity of internet finance to disrupt the country’s conservative banking industry.

Also read: Korean banks to launch blockchain ID verification programme

Kakaobank has since accumulated around 2 million new accounts whilst K-Bank has around 500,000 new accounts in mere months after the launch, according to data from The Financial Times.

Photo from ByoungHyun Chun - Own work, CC BY-SA 4.0

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