Photo: Kakao screen grab
Photo: Kakao screen grab

Kakao Bank sounds like a stuffy institution where all the staff dress in traditional pinstripe suits, white shirts and somber gray ties. But nothing could be further from the truth for this fledgling financial firm, which has made it on to Fast Company’s 2018 Top 50 list of the World’s Most Innovative Companies.

Launched in Seoul last July, the online South Korean bank attracted more than 300,000 customers in the first 24 hours. After just four days, it had pulled in 275 billion won (US$245 million) in deposits and approved loans of 260 billion won.

One month later, it had more than three million users.

“Kakao Bank may be new but it leverages a tremendously powerful asset [in] Kakao Talk, the digital messenger platform of Kakao Corp, a domestic internet company, which is one of the key shareholders,” Stephane Ray, the principal director of retail banking and technology consulting at Accenture, a global management and professional services firm, said in a note on LinkedIn.

“Created initially in 2010 as a mere instant messaging application for iPhone, Kakao Talk has since widely expanded its service. It is now used monthly by 42 million unique visitors [97% of the entire smartphone user population in South Korea],” he added.

By tapping into Kakao Talk’s database, the fintech firm has managed to draw in an array of serious backers, including Korea Investment Holdings and Kookmin Bank, one of the four largest lenders in the country ranked by asset value.

Other consortium members are Tencent, the massive e-commerce group in China, and eBay, the sprawling online giant based in the United States, with tentacles crisscrossing the globe.

Indeed, plans are already underway to launch a rights offering worth 500 billion won by April in a move to beef up capital reserves. “New funds are needed to cope with a rapid rise in assets and to launch new products and services,” Kakao Bank reported in a statement.

Yet part of the company’s success is that it was in the right place at exactly the right time.

Government report

Smartphone penetration in South Korea is hovering around the 80% mark, while 99.2% of households in a population of more than 51 million have internet access, a government survey stated last year.

In turn, this has allowed Kakao Bank to flourish after being one of the first fintech firms to be rolled out in the country.

“[It has] continued to beat expectations, with millions of customers pulled in by low-interest rates on personal loans and low commission fees on international money transfers,” Fast Company, a monthly business magazine published in print and online, stated in its Top 50 rankings.

“US-based messaging services, like Facebook-owned WhatsApp, may one day follow Kakao’s lead,” it added.

Still, this Cinderella story, even though there are some wealthy ‘sisters’ in the background, has taken the bank’s chief executive officer Yun Ho-young by surprise.

Earlier this month, he admitted he was pleasantly shocked by the way the company has performed in the past eight months.

“We didn’t know we were this big,” he was quoted as saying on the sidelines of the Money 20/20 Asia forum in Singapore on March 14, adding that Kakao Bank now has more than five million users.

Maybe, it is time to pull on that pinstripe suit after all.