Tencent Holdings and eBay joined Daum Kakao in its bid to become South Korea’s first Internet bank. The bid is for one of two licenses to build Internet banks, which the government will commission later this year.
Korea Investment Holdings will take a majority share of the Internet bank, should it be licensed by the South Korean government. Daum Kakao will take a 10 per cent share, and both Tencent Holdings and eBay will take a four per cent share, the maximum allowed for a non-Korean, non-financial company.
Daum Kakao owns popular messaging service KakaoTalk, the number one app in South Korea. In the past few months, it has been making moves into the finance sector, with the launch of BankWalletKakao and KakaoPay in the country.
The Internet bank will be maintained by Daum Kakao if it is licensed. It will work with the existing apps available for finance, allowing Kakao to build an ecosystem of financial apps.
The South Korean government is offering the licenses after a lack of growth in the financial sector over the past decade. It also plans to lower regulation across the financial sector, to allow banks and non-financial companies to get involved.
Tencent Holdings has its own bid in China for an Internet bank. South Korean’s tend to prefer apps from their home country, regularly picking Samsung and LG over American brands, and Tencent must feel like an investment is smarter than a bid of its own, through a subsidiary.
The carrier SK Telecom has been looking into an Internet banking license, through its IT subsidiary. South Korea is looking for more Internet-centric companies, blacklisting Samsung and Hyundai, which could make Daum Kakao’s bid even more prominent.