As Internet-only Kakao Bank fever has been sweeping, the power of the platform of the nation's most widely used messenger KakaoTalk has been confirmed once again.
Kakao Bank has attracted nearly 1.52 million accounts in eight days since its launch. Its huge popularity is largely due to convenience and security that other financial companies have failed to secure. However, the prevailing opinion is that Kakao Bank wouldn’t be able to enjoy such popularity without Kakao Talk. In addition to common features of Internet-only banks including lower interest rates and better user convenience than other commercial banks, Kakao Bank has leverage in the industry such as Kakao Talk which has 4.2 million users and Kakao Talk’s intellectual property rights like “Ryan Check Card.”
According to the data from Kakao Bank on August 8, the nation’s second Internet-only bank, which has opened service on July 27, attracted a total of 1.52 million new accounts until August 3, a week after the launch, accounting for 4 percent of Kakao Talk’s total monthly domestic users. It also attracted customer deposits of 653 billion won (US$579.67 million) and loans of 497 billion won (US$441.19 million). The figures stayed at a similar level of four-months-old K-Bank, the country's first Internet-only lender. One thing is for sure: Kakao Bank’s base of subscribers is growing at an alarming rate.
With Internet-only banks’ characteristics that don’t cost any offline fees including branches and bank tellers, Kakao Bank can offer lower service charges and loan interest rates than other commercial banks. This seems to be the biggest factor in attracting customers. Kakao Bank offers 2 percent interest rates for time deposits and maximum 2.2 percent rates for installment savings accounts for a year, which are higher than offline banks, and its transaction fee on overseas transfers is just 1/10 of what offline banks charge. For marketing purpose, the bank will also wave wiring and notification message fees on checking accounts until the end of this year.
In addition, Kakao Talk platform, character and sport are three other mobile-based factors of the Kakao Bank fever. An official from the information technology (IT) industry said, “From the beginning stage, Kakao Bank has created services based on its developers rather than commercial banks. Since its developers thoroughly think and question from the point of view of customers, the bank has become popular.”
Kakao Talk is a mobile messenger that has strong dominance in South Korea to the extent that it has 4.2 million users. It is safe to say that anyone who use smartphones in the country regardless of age uses Kakao Talk. Kakao Bank allows Kakao Talk users to transfer money to others in their friend list without the need of their bank account numbers, significantly improving the convenience of money transfer services. The users don’t need to punch in the bank account number of person they are sending money to and involve the digital certification process. Kim So-hye, an analyst at Hanwha Investment & Securities, said, “Kakao Bank should be considered part of huge platform dubbed Kakao Talk rather than a single Internet-only bank. We note the fact that the value of the Kakao Talk platform has been reevaluated.”
When it comes to factors of the Kakao Bank fever, Kakao Friends character “Ryan” is to be in. Ryan, which is a male lion with the gentle heart of a lamb, is the most popular character in the Kakao Bank fever. Nearly 55 percent of 1.04 million Kakao Bank’s customers who applied for a check card chose the Ryan Check Card. With simple design and popular characters, Kakao Bank check card is enjoying considerable popularity. Kakao also offers free emoticons, which are valid for a month, to Kakao Bank’s subscribers. Kakao spun off Kakao Friends, which runs character business, as its subsidiary. Kakao Friends posted 70.5 billion won (US$62.58 million) in sales last year, growing sevenfold from the previous year.
Kakao Bank also provides fun customer experience by introducing its products using YouTube and helping them enjoy investment services just like a game.
Considering low lending and savings margin, initial cost and possibility of additional capital increase in the future, Kakao Bank will not be able to make profits right way. With Kakao Talk’s power of connection, however, the bank can promote consumption of Kakao contents and develop various business models including e-commerce using big data.