Korea mulls allowing banks to adopt Toss' super-app strategy

South Korea's top financial regulator is considering allowing banks to provide basically all financial services in single apps, emulating fintech platforms that are rapidly penetrating into the financial services market.

Financial Services Commission (FSC) Chairman Koh Seung-beom said on Oct. 28 that the top financial watchdog is also looking at easing banking regulations so that they will be able to offer a broader range of investment advisory services. Currently, their investment advisory business is limited to the real estate segment. 

"Big tech platforms' increased presence in the financial services market is changing the competitive landscape," Koh said in a gathering with chief executives of leading South Korean banks.

"It is time to think about the future of banks and how to help them boost competitiveness ... We will build a regulatory framework to allow banks to provide various services via single apps to help them transform into digital universal banks," Koh added.

His remarks followed the official launch on Oct. 5 of Toss Bank, the third internet-only bank in South Korea. Its affiliate Toss, a mobile fintech platform, is evolving from a payment service app into a super-app, tapping into core financial areas such as banking and securities.

The platform considers its core competitiveness to be its super app strategy where all financial services are provided in a single app. Toss was able to expand into new services, free from the regulations applying to domestic banks and financial holding companies, said a banking industry source.

By comparison, traditional Korean lenders provide only banking services via their apps, while connecting users with their affiliate companies' apps for brokerage, insurance and credit card, respectively. 

"If we are allowed to operate in a single app, we will be able to combine the asset management expertise of our affiliated companies and create synergies," a leading Korean bank's executive told The Korea Economic Daily. 

The country's two other internet-only banks, KakaoBank Corp. and K Bank, have lured customers with higher saving rates and lower rates for the borrowers. KakaoBank, which made its trading debut last August, is now the country's most valuable lender with a market capitalization of 30 trillion won ($26 billion).

Toss, the country's popular digital wallet, is preparing for an initial public offering in 2023.

Write to Nan-sae Bin and Dae-hun Kim at binthere@hankyung.com
Yeonhee Kim edited this article.