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South Korea’s KakaoBank confident in its competitive edge for Thai, Indonesian markets

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KakaoBank’s headquarters in Seongnam, Gyeonggi Province / Newsis

Service architect reflects on past 7 years behind internet-only bank’s success

By Lee Yeon-woo

When KakaoBank first entered the market in 2016, there was skepticism about whether it could successfully stir up the monopolistic industry that was dominated by traditional banks.

Ko Jung-hee, chief strategy officer at KakaoBank / Courtesy of KakaoBank

Ko Jung-hee, chief strategy officer at KakaoBank / Courtesy of KakaoBank

However, it achieved groundbreaking success by offering services that met customers’ needs, such as simplifying the cumbersome verification process and introducing innovative financial products. It has also developed an intuitive mobile app environment, which has greatly contributed to transforming the standards of the finance industry.

As of January, nearly half of Koreans, approximately 23 million, are using the bank.

Seven years after its launch, the market environment surrounding the internet-only bank has once again become hostile.

Feeling threatened, many traditional financial institutions have responded with significant financial investments to improve mobile standards. Last year, financial authorities reopened the possibility of establishing a fourth internet-only bank to encourage further market competition.

However, Ko Jung-hee, chief strategy officer (CSO) at KakaoBank, believes that the emergence of the fourth internet-only bank will not be solely negative for the bank.

“If the general market expands, trust in internet-only banks can further increase, and we can offer more services to customers. Regardless of these developments, KakaoBank will focus on what we should do and what we can do best,” Ko told The Korea Times in a recent email interview.

Ko is the mastermind behind the bank’s innovative services. With her leading the bank, unique deposit services were created, such as group accounts, where any of the designated group members can manage and view details of the account’s deposit and withdrawal status. The exemption of ATM fees and transfer fees, which have now become the norm in the industry, was also initiated by the bank.

Now leading the bank’s expansion into the global market, Ko believes that the bank can leverage its expertise in creating mobile-friendly finance in Southeast Asia.

“People nowadays easily come across and use global mobile applications, such as YouTube, Instagram and WhatsApp. As the user experience becomes standardized, unlike the past PC environment, people intuitively understand mobile apps even if they are in different languages,” Ko said.

“From that perspective, I believe the environment has become more favorable for providing global services through mobile platforms.”

Superbank President Director Tigor M. Siahaan, left, and KakaoBank CEO Yun Ho-young / Courtesy of KakaoBank

Superbank President Director Tigor M. Siahaan, left, and KakaoBank CEO Yun Ho-young / Courtesy of KakaoBank

In 2023, KakaoBank acquired a 10 percent stake in PT Super Bank Indonesia, a digital-focused bank in the populous southeast Asian nation, with shareholders including Grab and Singtel. Its official launch is slated for the first half of this year.

That same year, it also formed a consortium with SCBX of Thailand, aiming to secure a virtual bank license in that country.

Both markets have high potential, according to Ko.

Approximately half of the 270 million Indonesians do not have bank accounts. This is largely attributed to the country being composed of around 18,000 islands, which makes it challenging to develop land-based transportation infrastructure. Ironically, this environment also creates significant potential for success in non-face-to-face digital banking.

Thailand, with a population of 70 million, is the second largest economy among the ASEAN member countries.

“Compared to the ‘overbanked’ Korean market with numerous banks competing for users, Southeast Asia presents a different scenario where many people don’t use banking services. This poses unique challenges, such as ‘How can we encourage people to use banks?’ It’s truly fascinating because it feels like starting from square one in a context that is different from Korea,” Ko said.

In addition to its global stride, the bank is setting its sights on becoming an essential app for Korean customers in both daily living and financing.

It is exploring the launch of exclusive products for minors, including infants and children, expanding investment products and wealth management services for those in their 40s and 50s, and introducing products designed for foreigners.

Collaborations with various partners to enhance the range of in-app services are also underway.

A smartphone showing KakaoBank's house loan service is pictured in front of commercial bank ATMs, Jan. 22. Newsis

A smartphone showing KakaoBank’s house loan service is pictured in front of commercial bank ATMs, Jan. 22. Newsis

From IT to financial industry

Unlike other executives in the financial industry, Ko did not build her career in this field.

She spent a decade at Daum, a web portal, where she navigated its service and strategy sectors. Following the merger of Daum and Kakao in 2015, she led the latter’s strategic support team. In 2016, she became the head of the service division at KakaoBank, and in 2020, she was appointed as the CSO.

Ko recalls that her experience in the IT industry, which has instilled in her a work philosophy of “providing service, not selling the product,” was also beneficial in the banking industry.

“The IT industry focuses on user-centric services, involving continuous monitoring of user feedback to update and improve services … This approach — identifying and addressing users’ pain points — has proven beneficial for KakaoBank,” Ko said.

Her experience with mobile-based work has also been a significant advantage.

“Unlike traditional banks, we did not transition from the internet; we never considered mobile banking as just another channel. Instead, we developed a complete banking service based on mobile, crafted by experts familiar with the medium,” Ko said.

When asked about her future strategies, Ko stated that she believes it’s her duty as a service provider to launch good new services.

“Since KakaoBank’s launch, people’s experiences with mobile banking have changed,” Ko said. “I believe that a good service changes our lives, and these changed lives can change our future as well.”

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