The Fourth Internet Specialty Bank (Fourth Internet Bank) is seeing banks increasingly withdrawing their challenges. DOUZONE declared its withdrawal from the Fourth Internet Bank, and with Shinhan Bank's absence effectively confirmed, KB Kookmin Bank has also concluded it will not participate. A Kookmin Bank official noted, "We internally reviewed the investment in the Fourth Internet Bank consortium but ultimately confirmed we would not participate."
The atmosphere is quite different from the last three pre-approval sessions. While there was fierce competition among consortiums aiming to capture the 'money-lending' bank, the banks themselves have also been secretly probing their participation in consortia mentioned as strong candidates, engaging in a battle of wits with competing banks. As of now, the only two banks confirmed to join the Fourth Internet Bank consortium are Woori Bank and NH NongHyup Bank. These two banks have confirmed their participation in the small and medium enterprise (SME) bank consortium led by Korea Credit Data (KCD).
The banks' lack of enthusiasm for investing in the Fourth Internet Bank stems from their judgment that there is "little benefit" to be gained. Heightened approval standards from financial authorities, increased regulations on loans for middle- and low-credit borrowers, and the limitations of being a specialized bank for small and medium enterprises and small businesses have raised doubts about the profitability of internet banks, reducing their investment appeal. An official from one bank stated, "It is questionable whether we can achieve the expected growth and profitability while faithfully fulfilling the financial authorities' emphasis on funding for SMEs and small businesses outside the capital region," adding, "We concluded that it would be inherently difficult to manage the business model from a health perspective, including arrears. "
The banks' intention to participate in the consortium for equity investment in the internet bank is not solely for the purpose of revenue generation as financial investors (FIs). It is also not primarily for exercising voting rights as shareholders. The banks' main goal is to secure a differentiated alternative credit evaluation model leveraging the information accumulated by fintech companies participating in the internet bank consortium. The key theme presented by the consortiums challenging the Fourth Internet Bank is 'funding for small and medium enterprises and small businesses,' aimed at enhancing their lacking capabilities in this area.
However, utilizing alternative information is not something that requires investment in an internet bank. Banks are actively exploring ways to leverage non-financial information in loan assessments through business partnerships. A representative example is "Naver Face Core." Naver Face Core is a personal credit evaluation model developed jointly by Naver Pay and NICE Information Service, characterized by its use of non-financial information such as online payment history and shopping records. Currently, it is reported that Shinhan Bank and NongHyup Bank are reviewing its applicability. The previous day, DOUZONE also announced it would withdraw its application plan for the Fourth Internet Bank approval, stating, "We have decided to shift our strategy towards integrating a new financial platform."
The banks' sluggish investment and the impact of an unstable political situation have made the success of the Fourth Internet Bank uncertain. Following DOUZONE, U Bank also announced it would postpone its preliminary application, leaving only one strong candidate left in the small and medium enterprise bank consortium. The financial authorities have stated they will proceed with the approval process as scheduled, starting with the acceptance of preliminary applications from the 25th to the 26th.