November 21, 2024

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Shinhan Bank headquarters in central Seoul (Shinhan Bank)

Shinhan Bank, one of the country's top commercial lenders, has thrown its hat in the ring for a license that would make it the country's fourth internet-only bank, competing in the digital space with K bank, Kakao Bank and Toss Bank.

Shinhan has joined a consortium launched by Douzone Bizon, an enterprise resource planning software provider, to win approval to launch an internet-only bank. Online lenders here provide most financial services from savings to loans, operating without a physical branch.

The tentatively named Douzone Bank Consortium is to apply for the license in June or July.

Douzone Bizon, a Kospi-listed company, announced Thursday it would apply for the license to launch an internet lender specializing in small and medium-sized as well as micro enterprises. It said it will enable funding for businesses that have had to rely on collateral and guarantees due to insufficient credit rating data.

If Douzone Bank Consortium earns the license, Shinhan will be the last of the four major commercial banks here to invest in an internet-only bank. As of end-2023, KB Kookmin owns a 4.88 percent stake in Kakao Bank, while Hana holds 8.99 percent in Toss Bank and Woori has 12.6 percent in K bank.

Over the years, Shinhan has been in a managing partnership with Douzone Bizon. In 2021, it acquired a 1.97 percent stake in the solution provider, following a business agreement. The two parties also formed the joint venture Douzone Techfin, aiming to provide a finance platform for small and midsized enterprises.

In July, the regulatory Financial Services Commission lowered the bar for an internet-only bank operation by announcing the banking industry will be a contestable market where bidders with "demands and business plans which are considered stable and viable" can apply for a license at anytime, aiming to end the current oligopolistic banking system dominated by major commercial lenders.

With Douzone Bizon and Shinhan Bank teaming up and joining the race, there are four bidders who have officially announced they will apply for a license to operate Korea’s fourth internet-only bank, including Soso Bank, Korea Credit Data Bank and U-Bank.

By Im Eun-byel (silverstar@heraldcorp.com)
The Korea Herald