Business Expansion
At the Mobile World Congress 2014, Kakao CEO Lee Seok-woo mentioned that the company will launch its new mobile financial service in the first half of this year. Related to his remarks, the industry is paying attention to whether or not Korea’s top messaging company will be able to dominate the mobile financial services market.
Much attention is also being paid to whether or not Kakao’s next move will mark a turning point in the struggling market. The reason for the industry’s attention lies in the fact that there are no representative platforms, despite a large number of similar services already available in the market.
According to Kakao on March 2, a closed beta test of its upcoming mobile financial service where people can exchange a small amount of money on KakaoTalk will start this month. Currently, the mobile messenger service provider is coordinating different opinions with the Korea Financial Telecommunications & Clearings Institute (KFTC) and 16 banks. The company is likely to launch its service in the first half of this year.
The service will allow users to conveniently exchange a small amount of money by sending previously charged money to their KakaoTalk friends at the click of a button. The firm is aiming at providing a one-stop financial service via virtual accounts on its platform without using mobile banking applications.
The idea is not new, though. In fact, there are a number of similar services on the market, including ZooMoney released by KT and Shinhan bank, BankWallet by KFTC and 18 banks, and N Wallet by Hana. The three services also enable people to exchange money within a certain limit on mobile phones or through mobile phone-based virtual accounts, after recharging money in advance.
However, these mobile phone-based financial and payment services are not popular. So far, these services have not attracted enough users yet, even though it is much easier to send money using those services than utilizing mobile banking services where people are required to go through several steps involving account numbers, passwords, a security card, and a certificate for electronic banking. The unpopularity of those services is mainly attributable to a lack of easily recognizable platforms.
Against this backdrop, Kakao’s effort is receiving a lot of attention, in that KakaoTalk, a widely popular mobile messaging platform in the nation, could revitalize stagnant mobile financial services. The new service has an appeal for Kakao, since the firm can expand its business to a new area. Nevertheless, its specific profit model has yet to be announced.