Kakao Bank officially began operations Thursday at 7 a.m., becoming the second online-only bank to be launched in South Korea, but it was quickly met with complaints due to the server failure of the bank’s mobile app.
Within eight hours of the launch, some 230,000 users had downloaded the mobile app, through which some 103,000 new bank accounts were created, according to the bank. It also drew 26 billion won ($23.3 million) in deposits and savings accounts, while extending loans worth 14 billion won.
The mobile platform-run Kakao Bank allows users to make ordinary deposits and time deposits with higher interest rates, as well as take out loans with lower rates compared to traditional lenders. Its wiring service is run on the nation’s most popular messenger app Kakao Bank. The bank unveiled Sunday that its commission fee for outgoing foreign wire transfers is one-tenth that of traditional banks.
Kakao Bank headquarters in Bundang, Seongnam City. (Yonhap)
Kakao Bank’s creation stems from “a group effort to think outside the box,” said Lee Yong-woo, co-chief executive officer of the bank, at a showcase event held at Some Sevit in Seoul.
“People from different backgrounds came together to challenge the common knowledge of how banks work and how technology works,” Lee said. “Each day for two years, we have been through a series of debates.”
Choi Jong-ku, chairman of the Financial Services Commission, called Kakao Bank a game-changer.
“Innovations in the banking industry will be driven by small but nimble players in the financial sector,” said the top financial policymaker. “Combined with the technology platform, Kakao Bank will lay the foundation for changing the way we approach financial services.”
But some users of Kakao Bank said online that they experienced inconveniences including failure to subscribe to banking services or make transactions due to connectivity issues.
A screenshot of a smartphone showing server failure of Kakao Bank's online banking service.
Yun Ho-young, another co-CEO of Kakao Bank, apologized for the trouble during the press conference, adding that its server is capable of handling a maximum 100,000 users online.
Kakao Bank is based on a consortium of nine shareholding firms, with Korea Investment Holdings controlling 58 percent of its shares. The bank’s de facto parent company, internet firm Kakao, and the nation’s leading bank in net profit Kookmin Bank hold 10 percent each.
Kakao Bank gained final approval in April with paid-in capitalization of 300 billion won, 1 1/2 years after getting preliminary approval in November 2015. In May, the Korea Federation of Banks approved the entry of Kakao Bank as the 22nd banking institution and second branchless bank.
By Son Ji-hyoung (email@example.com