Regulator starts receiving applications for Internet-only banks

South Korea's financial regulator on Wednesday started to receive preliminary applications from consortiums for a license to launch the country's first Internet-only bank.

The Financial Services Commission said that it will accept bids through Thursday and give approval to one or two operators by the end of this year.

An Internet-only bank, or a direct bank, is a bank that offers financial services online without brick-and-mortar buildings. Such banking emerged in the 1990s with the advent of online banking technology.

The FSC has announced a plan to introduce the direct bank business as part of its efforts to deregulate the local financial industry and foster the fast-growing financial technology sector.

Under the FSC plan, Internet-only bank operations will range from deposits, lending and credit cards to foreign exchange transactions, and their financial soundness would be regulated the same way as that of other commercial lenders.

It has encouraged an IT firm-led consortium to make a bid for the new banking business in order to attract industrial money to the financial sector.

The regulator is now working on lowering legal entry barriers, including stake ownership limits, which has banned non-financial firms from owning a more than 4 percent stake in a bank. It has already removed requirements that all banks must have physical offices and face-to-face channels with customers.

Insiders expect Kakao Bank, Interpark Bank Grand, KT and 500V consortia to apply.

The FSC said it will scrutinize all documents submitted by applicants and check related qualifications, including their financial stability, shareholdings structure and customer service plan, before a final decision. (Yonhap)