Internet banking image. /Courtesy of Getty Images Bank

Fintech corporation A, based in Yeouido, Seoul, is currently in the process of developing a credit evaluation model. A is particularly focused on creating a model to assess the credit of small and medium enterprises (sme) located in non-metropolitan areas. This is necessary because it will soon supply a new regional small and medium enterprises (sme) credit evaluation model to a consortium that is establishing an internet bank and is set to sign a business agreement. A's representative noted, "As the financial authorities are closely monitoring the capability of the fourth internet bank to supply funds to regional small and medium enterprises (sme), we are deploying all personnel for the relevant model development."

With the announcement of the schedule for applications for preliminary approval of the fourth internet specialized bank, a race for the establishment of the next internet bank is set to unfold. Consortiums that have already declared their intentions are moving forward with the development of an advanced credit evaluation model for regional small and medium enterprises (sme) and are preparing to be competitive. The financial authorities have designated the fund supply plans to non-metropolitan small and medium enterprises (sme) as a key evaluation criterion, and the consortiums are preparing to score high.

According to the finance industry on the 23rd, the consortiums preparing to establish the fourth internet bank are teaming up with specialized credit evaluation firms or fintech companies with experience in credit evaluation model development to create a credit evaluation model tailored for regional small and medium enterprises (sme). The Sosobank consortium has begun collaborating with the fintech company Winkstone Partners on the credit evaluation model development and is considering additional partnerships with 2 to 3 other corporations. The Ubank consortium has entered a preliminary phase of developing a credit evaluation model while testing pseudonymous data combination. The Deojun Bank consortium is also preparing to develop a credit evaluation model specialized in regional small and medium enterprises (sme).

Graphic by Jeong Seo-hee.

The consortiums became busy right after the Financial Services Commission announced detailed scoring for the internet bank review. Last month, the Financial Services Commission stated that it has set the total review score at 1,000 points, assigning 200 points for the inclusiveness score. The inclusiveness score has increased by 50 points compared to the 2019 review, with the addition of a criterion for "fund supply plans to regional corporations (50 points)." The Financial Services Commission reported that existing internet banks have not provided sufficient loans to corporations in non-metropolitan areas and thus established this new evaluation criterion.

Existing financial institutions have primarily developed credit evaluation models for individual borrowers or large corporations. In contrast, models that carefully assess the loan repayment capability of small and medium enterprises (sme), considering the characteristics of each region, have lagged behind. It is not feasible to simply provide large loans to regional small and medium enterprises (sme) for the purpose of obtaining business permits, and it is difficult to properly assess the repayment capabilities of regional corporations using only existing credit evaluation models. Consequently, the consortiums have initiated the development of new evaluation models to enhance the practicality of their businesses while also aiming to secure review scores.

The competitiveness of the new credit evaluation model for regional small and medium enterprises (sme) is expected to hinge on data analysis capabilities. Kwon Oh-hyung, representative of Winkstone Partners, explained, "It is not sufficient to simply accumulate a large amount of data on regional small and medium enterprises (sme). We need to possess the ability to analyze data considering the industrial characteristics of the region, the value chain of the region, and the prospects of the relevant industry to create a more sophisticated credit evaluation model for regional small and medium enterprises (sme)."