A consortium led by KT aims to become Korea’s first internet bank. It said the bank would boast a competitive advantage of making the most of big data. The consortium, dubbed “K Bank,” will lower costs based on big data collected from such areas as financing, communications and retail. This is the reason why securing high-quality big data could lead to less risks in redemption of loans and provision of high-efficiency financial services. 

“We plan to forge an alliance with foreign telecom companies to set up a system of remitting money abroad, and transfer fees may be lowered to the levels equivalent to one-tenth of the current fees,” said Executive Vice President Kim In-hoe of KT’s CEO Office.

The consortium of KT Bank expounded the prospective internet bank’s plans and vision at an explanation session at the KT building at Gwanghwamun, downtown Seoul on Oct. 28.

The consortium consists of KT; Hyosung ITX; Nautilus Hyosung; Bankware Global; POSCO ICT; BridgeTech in the ICT sector; GS Retail; YAP Company and Easy Welfare in the platform and commerce areas; Woori Bank; Hyundai Securities; Hanwha Life Insurance; KG Inicis; KG Mobiliance; Danal; KICC; Infobine; and 8percent in the account payment, security and financial technology sectors. 

K Bank is now competing with two other consortia, headed by Kakao and InterPark. 

The KT consortium cites big data as one of its strong points. KT Executive Vice President Kim said his consortium, which consists of shareholders in diverse business arenas, surpasses its rivals in terms of the quality and amount of big data. Stakeholder companies are estimated to have a cumulative membership of 200 million people and 6.8 billion cases of account information, surpassing its rivals. He added that the KT consortium is also leading in terms of big data analysis capability. 

Internet banks’ securing big data could lead to cost reduction: cutting down on risks on extending loans with interest rates of a range of 10 percent they could develop through precise credit rating systems. They could also reduce operation costs since they do not need many banking outlets like commercial banks. The KT consortium said it is targeting some 20.7 million customers by releasing loan products with interest rates ranging from 4.9 percent to 15.5 percent. Commercial bank customers borrow loans with an average of 4.9 percent, and borrowers shoulder interest rates of more than 15.5 percent from secondary financial institutions. 

Kim said internet banks cannot dismiss off-line financial transactions, much of which are done in reality. K Bank can utilize such places as automatic teller machines at GS Retail’s outlets, KT’s public phone booths as its off-line channels. 

Taking into account its competitive edge, the KT consortium said it is taking its cue from Japan’s exemplary internet bank, Jibun Bank, a joint venture between Japan’s biggest commercial bank Tokyo Mitsubishi UFJ and Japan’s second largest telecom service provider KDDI.