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Hanwha financial unit joins consortium for internet-only banking

By Lim Chang-won Posted : March 27, 2019, 12:02 Updated : March 27, 2019, 12:02

[Courtesy of Aju Business Daily DB]

SEOUL -- Toss, a fintech unicorn which benchmarked European digital challenger banks to open a new internet-only bank, managed to rebuild a consortium by attracting two more domestic partners -- a financial unit of South Korea's Hanwha group and a cloud management platform developer.

In a regulatory filing on Wednesday, Hanwha Investment and Securities said it acquired a 9.9 percent stake in the consortium led by Viva Republica, the operator of Toss, which is set to send an application for preliminary state authorization. Hanwha Investment said its investment in the consortium is aimed at creating synergies and securing new revenue models.

Bespin Global, which develops and offers a cloud management platform, acquired four percent, while Toss controls 60.8 percent. Five others partners are Korea Electronic Certification Authority (4%), Musinsa (2%), Altos Ventures (9%), Goodwater Capital (9%) and Ribbit Capital (1.3%).

The Toss consortium was rebuilt after South Korea's leading financial group, Shinhan, Hyundai Insurance and other domestic partners withdrew last week. While Toss wants an innovative start-up system like a digital challenger bank, Shinhan has sought an open banking system, which emphasizes inclusiveness and easy access.

Digital challenger banks have raised more venture capital than any other fintech vertical in Europe. The rise of challenger banks was enabled by new regulations that make it easier than ever to start a bank. They operate through a simple business model that provides them a cost advantage.

South Korea's top food delivery service Baedal Minjok and Jikbang, a leading real estate app service provider, will not participate in the Toss consortium, but they agreed to maintain close business cooperation. Toss said it would use its financial mobile platform to provide optimized services for individual clients and small business operators.

Another consortium in the race to open a new internet-only bank has been formed by Hana Financial, SK Telecom and Kiwoom Securities, which provides online brokerage services. The three companies called for the combination of banking services with artificial intelligence, big data and ICT.

Two internet-only banks, K bank and Kakao Bank, have gained popularity by providing diversified loan services and easy lending to young smartphone users. They have forced commercial banks to renovate their online and mobile banking services.

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