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Goal to reach 2 trillion won in individual business loans by the end of the second halfIncrease individual business customers and strengthen platform synergy
Kakao Bank is promoting platform strengthening by expanding individual business loans. It is expected to create synergy with 24 million general customers in the future.
According to the financial industry on the 8th, Kakao Bank aims to expand individual business loan balance to 2 trillion won by the end of this year. The current individual business loan balance is 1.4 trillion won.
As of the end of the first half of the year, Kakao Bank secured 850,000 individual business customers. Most of these customers are using the ‘Policy Fund Integrated Inquiry Service’ and utilizing corporate policy fund loan products. Currently, the policy fund integrated inquiry service is provided in Incheon, Sejong, Daejeon, Gwangju, Jeonnam, Busan, and Gyeongbuk regions, and is promoting expansion to Seoul, Chungnam, Chungbuk, Daegu, and Gyeongnam regions by the end of this year. Once the regional expansion is complete, most major cities in Korea will be included, increasing the possibility of securing more Kakao Bank individual business customers.
They are also preparing to launch secured loan products for individual business owners and credit loan products exceeding 100 million won.
A Kakao Bank official said, “We expect growth as the domestic individual business loan market size is 450 trillion won.”
Kakao Bank announced that it will launch individual business service at the end of 2022 and strengthen its platform through this. It first released account, card, and loan services exclusive to individual business owners, and plans to build an integrated infrastructure that covers tax management, sales management, corporate conversion solutions, and business closure management.
The financial industry cites the financial authorities’ management of household debt as the reason for Kakao Bank’s expansion of individual business loans.
Financial authorities are sensitive to the increase in household debt, as Financial Services Commission Chairman Kim Byung-hwan emphasized upon taking office in July that he would review and manage household debt. Since the financial authorities are concerned about household loans from banks, it will be difficult for Kakao Bank to continue to pursue growth through general loans. Since many self-employed individuals have difficulty in obtaining funds, financial authorities are unlikely to be sensitive to growth centered on this segment.
Another advantage is that Kakao Bank, which has 24 million customers, can expand platform synergy through self-employed services.
When self-employed individuals receive loans from Kakao Bank and expand their businesses, they can analyze which customer segment generates the most sales and conduct targeted advertising. They can also analyze age, region, and gender to consider whether to launch services that will attract more existing customers or target weaker customer segments.
Currently, the number of self-employed individuals registered with the National Tax Service is 8.65 million, and Kakao Bank’s market share is only 10%. If it secures more self-employed individuals in the future, it is likely that it will speed up the development of products that will create synergy.
It is believed that Kakao Bank has also established the foundation for creating attractive loan products. Thanks to its low-cost deposits, Kakao Bank has a funding cost ratio of 2.37%. Considering that the average interest rate of commercial banks is 2.76%, Kakao Bank has more room to apply a lower interest rate on personal business loans.
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