Korea's Toss targets SE Asia, Japan with super app

South Korea's mobile financial platform Toss is evolving from a payment service app into a full-fledged financial service provider, or a super app, after launching banking and securities services last year.

The fintech platform is now keen to expand its customer base beyond those in their 20s and 30s, who account for the bulk of its users, said Lee Seung-gun, founder and CEO of Viva Republica Inc., the parent company of Toss.

Toss is also stepping up its global expansion, targeting Southeast Asia and Tokyo. To that end, it will open its global headquarters in Singapore as early as the current quarter.

"We need to further scale up our business, based on our super app strategy," Lee told The Korea Economic Daily last week.

"We will let Toss users know and experience that they don't need any other apps besides ours.”

Established in 2015, the platform considers its core competitiveness to be its super app strategy where all financial services are provided in a single app. 

Lee refuted some views that the domestic fintech market has reached the saturation point. The 40-year-old noted the company will broaden its services to serve teenagers, who are not allowed to independently open banking accounts, and senior citizens, who may feel uncomfortable switching to online banking services.

He also argued that despite the rapid increase in fintech operators, they have so far remained smaller players in the country's financial services market in terms of sales and profits, voicing concerns over touch regulatory moves designed to keep fintech services in check.

GLOBAL GROWTH

Toss boasts 21 million customers, including 12.4 million active users, in South Korea which has a 50 million population.

"By the end of next year, Toss will have a larger user base in overseas markets than in South Korea," Lee said in an interview with this newspaper on Jan. 26.

"Our goal is to become a company that has an impact around the world, rather than a company that only represents South Korea."

Viva Republica's strategy head Seo Hyunwoo said the company will proactively look for overseas investments and acquisitions, shifting from its organic growth strategy. 

In its first step toward overseas expansion, Toss made inroads into Vietnam in 2019, launching money transfer and asset management services. The Vietnam operations, wholly owned by Toss, also became the first non-banking company offering prepaid cards there, with 3 million active users. 

Alongside websites that compare insurance products and loans from different institutions, it expanded into core banking services there -- credit card issuance and short-term small loans in partnership with Vietnam International Bank (VIB). 

In November of last year, Toss ventured into Malaysia, Indonesia, Thailand, the Philippines and India, and secured a total of 10,000 users of its local services in those countries.

"We're now living in the mobile era where we can win customers over with a product that addresses their pain points, without spending money nor brand power," Lee said.

"Our 3 million customers in Vietnam proved it ... I'm confident we can see explosive growth in other overseas markets as well, in competition with global enterprises."

DOMESTIC SERVICES

At home, its banking service is focused on lending to those with lower credit scores. Toss Bank charges lower interest rates than non-banking financial institutions, while offering higher savings rates compared to conventional banks.

For brokerage services, Toss Securities is trying to make stock investing more accessible to individuals, unlike established rivals targeting high-net-worth customers and professional traders.

"If we widen our customer base, we will be able to make as much profit as other brokerage companies, despite the low per-person profits,” Lee stressed.

This year, Toss is preparing to launch a credit bureau, which collects individual credit information obtained from delivery apps and other platforms and sells it to lenders for a fee.

DECACORN STATUS

Last year, sales at Toss' owner Viva Republica more than doubled to 880 billion won from a year earlier. Applying the average multiple of global peers of 15-20 times, its valuation is expected to exceed 10 trillion won.

Based on the estimate, Viva Republica will likely earn its place in the decacorn club, or a private firm with a valuation of over 10 trillion won, as it kicked off the process to raise around 1 trillion won ($831 million).

Back in 2018, Toss gained unicorn status, becoming the first South Korean startup to receive investments from Singapore’s GIC and Sequoia China of Sequoia Capital. 

When asked about the happiest moment in his life, CEO Lee said: “It hasn’t come yet. I’ll be glad if Toss becomes the first thing that comes to everyone's mind whenever they need a financial service. I will make it happen within the next five years.”

Write to Nan-Sae Bin, Hyun-Woo Lim and In-Hyeok Lee at binthere@hankyung.com
Yeonhee Kim edited this article.