Viva Republica, a financial technology service startup with its flagship money transfer mobile app Toss, announced on Feb. 11 that it has joined hands with Shinhan Financial Group to establish an internet-only bank in Korea.
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The consortium led by Viva Republica and Shinhan is the first one to reveal its intent to jump into the banking industry, following the local financial regulator’s earlier bid to invite more players in the scene. They will be joined by tech startups such as car rental app operator SoCar and mobile realtor app operator Dabang.
Viva Republica will be the largest shareholder of the new bank, while Shinhan will become the second-largest, according to a company spokesperson. The consortium plans to submit an application in March.
Other potential bidders such as Daou Technology and financial firms SBI Holdings and Kyobo Life Insurance have yet to disclose their plans. The likely bidders such as internet giant Naver and e-commerce firm Interpark had recently dropped out.
This comes after the Financial Services Commission announced it plans to grant approval for two more banks without brick-and-mortar branch networks, in order to ramp up competition through deregulation. Korea is currently home to two online-only banks -- K bank and Kakao Bank -- that both began operations in 2017.
The FSC in January raised the upper threshold for non-banking entities’ ownership of internet-only banks to 34 percent with voting rights. Prior to the deregulation, a non-banking entity in a consortium was not able to own over 4 percent of common shares, forcing the de facto leader to team up with financial companies.
Viva Republica is currently valued at some US$1.2 billion, becoming one of Korea’s six unicorn startups in December. It has recorded some 22 million app downloads and had 33 trillion won (US$29.30 billion) accumulated domestic money transfers in four years of operation. Shinhan Financial Group is projected to have posted 3.15 trillion won net profit last year, the largest in the nation.
By Son Ji-hyoung (firstname.lastname@example.org)