Kakao Bank – A Disruptive Banking in South Korea


Internet dedicated bank service was launched in South Korea and Kakao bank seems as another icon as “disruptive player” in this market. Compared with 1st Internet Bank in South Korea, K Bank, it is much powerful to compete with the legacy Korean banks. You can check with the numbers…

Then, why this is happening in Korean market? There are 4 reasons for this phenomenon plus phantom.


  1. Kakao messenger’s power leverage to the service

Analysts say that consumers have contributed to preferences such as brands and emoticons that are familiar with consumers, as well as transferring money to Kakao Talk.


According to Kakao, the Monthly Active Users have risen 35,000 including 42,430,000 users in Korea totally. The total population of Korea is around 50,000,000. That means that Over 85% of citizens are using Kakao and it was easy for Kakao to leverage its user base from messenger to bank service.


  1. Easy and Convenient User Interface and User Experience

One of the reasons why MacBook or Chromebook adoption was low in Korean market was public certification for finance service in Korea. If a citizen was trying to transmit the money from his/her account to another account in Korean, he/she had to put in

a) account password

b) ARS certificate

c) putting special security card passcode(or OTP)

d) public certification password


However, with Kakaobank, it was more like one time authentication by putting password just one time. This was more simple and made everyone to attract.


  1. Differentiated Finance Service


Transaction fee via the legacy banks in South Korea were high. Kakao Bank made its own transaction and transmission network for the transmission with the fee around 10% of current service. After Kakao bank launched this service, some of the legacy big banks in Korea announced that they will lower the transmission fee to other countries.


K-bank’s “Employee K lending” has lower interest rates than existing bank notes and credit loans, and customers gathered from the beginning of the product launch. However, too much popularity has called on the formation. In the 70th day, it will be financed by a scale of 570 billion won(USD 570 Million). This year, it will exceed the 400 billion won (USD 400Million) which is the loan target set by the bank greatly, and while sacrificing the soundness such as bank capital adequacy ratio, It was totally interrupted.


From the customer’s point of view, credit loans that can be easily used with low interest rates, using non-face-to-face channels such as smartphones, are the biggest reasons for using Internet banks. However, due to the characteristics of Internet banks with a low capital base, there is a limit to ‘physical quantity’ in order to issue low interest loans. In order to receive a loan, if we had to receive a loan earlier than other people, a “first come first served” structure was formed.


A stakeholder in the financial zone said, “While looking at cases where lending from K Bank was interrupted, in many cases people once saw an account and created an account from minus passbooks to the idea that the cocoa bank might be cut off “. The interruption of the sales of the rival K Bank’s goods is the first prize of the entertainment of Kakao Bank.


After lauch of Kakao Bank, the legacy banks started to change the UI/UX including simplification of the process. Some of the analysts are expecting this will be a short phenomenon. Others say that this will be the beginning of the change of the banking environment.


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