From next year Internet-only banks will be allowed to do business. The Financial Services Commission said on December 28 that it would permit insurance companies, securities firms, and credit card companies to open Internet lending business. In addition, info-tech companies like Naver and Daum Kakao will also move into the finance business. But the government regulator will restrict the Internet-only banks' business range to small lending to small business operators.
This is because of the law forbidding any industrial firms from owning more than a 4-percent stake in financial firms. Without this restriction, the watchdog said, large business groups would dominate the new type of financial service in no time. The Internet-only banks will be allowed to take deposits while being restricted in issuing bank bonds. As for foreign currency transactions, they will be allowed to send and receive small amounts only.
Under the new rule, it is likely there will be a score of new entrants in the business but it will take more time to see Internet lenders affiliated with industrial firms like Samsung Electronics or LG Electronics. In the United States and Germany, for example, GM and BMW have established Internet banks, Ally Bank and BMW Bank, respectively, despite their status as car manufacturers.
Source: The Korea Economic Daily
