South Korea’s first online-only bank K Bank started its operation on Monday, making it the first bank in 25 years to win approval from the nation’s financial authorities to launch its commercial business.

K Bank held a launch ceremony on Monday at KT Square in Seoul, which the Financial Services Commission (FSC) Chairman Yim Jong-yong, the National Assembly’s State Affairs Committee Chairman Lee Jin-bok and KT Corp.’s Chief Executive Officer Hwang Chang-gyu attended. The bank is led by the nation’s leading telecommunications company KT with an 8 percent stake, and 20 other companies.

K Bank pronounced it would open an era of ‘Bank Everywhere’ to allow customers to use banking services anywhere and anytime.

The internet-only bank will be able to offer loans with relatively favorable interest rates than conventional banks because it doesn’t have any brick-and-mortar branches, which would allow it to operate without any personal and real estate expenses. It will provide loans with borrowing cost of around 4.2 percent a year to young people, small business owners and working class people. Its overdraft account named Mini K provides loans with a limit of 3 million won ($2,690) to 5 million won with a fixed annual rate of 5.5 percent.

The bank will also launch a service that will allow users to take out loans just with fingerprint recognition. Customers can withdraw money by using cash machines set up at GS 25 convenience stores across the nation without additional fees.

The launch of the country’s first online-only bank is expected to make competition in the commercial banking industry more intense. The government also approved another internet-only bank Kakao Bank that is aiming to open its service soon. Both are led by a number of technology and financial companies.

The FSC Chairman Yim said that the internet-only bank has brought a new competition in the financial industry, leading other banks to strengthen their mobile platforms to stay ahead.

By Lim Sung-hyun

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]