Three's a crowd: Shinhan and fintech unicorn Viva Republica leap into Korea's internet-only banking race

The partnership will have immediate access to 11 million users of e-payment app Toss.

The country’s biggest bank, Shinhan Financial Group, is joining South Korea’s internet-only banking race through a consortium it formed with Viva Republica-owned mobile payments platform Toss. The consortium will be the third player in the internet-only banking race where it will contend with kakaobank and K Bank which launched in 2017. Toss believes it is in a strong position to capture market share in the heating web-only banking scene given the accumulated experience of Shinhan.

“Their in-depth experience of running an actual bank will be of significant value as we build out the various functions of the new entity from the ground up,” a spokesperson from the mobile payments firm told Asian Banking & Finance.

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Toss will be launching the service with immediate access to over 11 million of their app users. “We view this as a huge advantage as we will focus on enabling additional services for our users, rather than trying to lure new customers,” the spokesperson said, adding that they are in talks with potential partners for the launch. Hyundai Marine Fire and Insurance, Korea’s third largest non-life insurer, is reportedly considering joining the Shinhan-Toss consortium.

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For Lee Hyungin, finance industry leader/partner, Deloitte Korea, the consortium between Shinhan and Viva Republica is considered as the largest combination of synergy between Korea’s largest financial institution and ICT companies. “With Shinhan’s powerful brand and execution power, a broad and strong customer base, and the well-coordinated portfolio of banks/card/insurance/ securities, it can be seen as a case of enterprise-wide and active progress by overcoming the limitations of digital innovation being deployed by existing banks in Korea,” Lee explained. “Although there is a tendency for some to consider mobile banking as an auxiliary means of offline branch, overcoming this limitation is the biggest learning point for internet-only banks.”

Days after Shinhan bared its plans, Hana Financial Group also revealed its partnership with SK Telecom and Kiwoom Securities to bid for a preliminary approval to operate an internet-only bank. The FSC will reveal shortlisted firms in May, which allows new internet-only bank players to roll out their operations by June.