Tag: kakao bank

  • How Korean digital banks are taking divergent paths

    How Korean digital banks are taking divergent paths

    Korean digital banks are among the most consistently successful in Asia and internationally. In fact, Kakao Bank was one of the first major digital lenders to reach profitability in 2019, and it did so just two years after its founding. Recently IPO’d K Bank and soon-to-IPO Toss Bank (under its Viva Republica parent) have also consistently posted strong financial results over the past two years.

    Korean digital banks started off serving the same customers in their home market. These segments include retail consumers, small and medium enterprises (SMEs), large corporates, and freelancers and gig economy workers. Retail consumers represent the largest segment for Korean digital banks, fueled by the extensive adoption of mobile banking and digital payment solutions. For their part, SMEs are increasingly turning to Korean digital banks to enhance their payment processing, financing, and overall business management. For their part, large corporates turn to digital banking for sophisticated treasury and cash management solutions. 

    While Korean digital banks all still serve these customer segments, as their business models mature and the digital banking market becomes more competitive, they are starting to take divergent paths. For instance, Kakao is expanding overseas with a focus on Thailand and Indonesia. In Thailand, Kakao has a partnership with SCB, one of the largest Thai incumbent lenders. As for Indonesia, Kakao said in December it would accelerate its global expansion by deepening its partnership with Superbank, an Indonesian digital bank in which it made its first overseas equity investment.

    Kakao is already benefiting from its bet on Superbank, which went public on the Indonesia Stock Exchange (IDX) in December. The IPO raised approximately Rp2.8 trillion (US$168 million) by selling a 13% stake at 635 rupiah per share. It was oversubscribed over 300 times, signaling strong investor demand.

    Superbank Indonesia achieved profitability in 2025, swinging to a net profit of Rp 99.68 billion (US$5.9 million) from a net loss of Rp 366.4 billion in 2024. This turnaround was driven by 160% year-on-year growth in net interest income and strong loan expansion fueled by ecosystem partnerships with Kakao Bank and Grab.

    While Kakao Bank is focused on expansion in Southeast Asia, K Bank has doubled down on its partnership with cryptocurrency exchange Upbit. Despite the inherent risk of its crypto-centric approach, K Bank has managed to grow briskly in recent years. Its 2024 net profit of 128.1 billion won was nearly 10 times as large as its 2023 profit of 12.8 billion won. It also had 12.74 million customers by the end of 2024.

    Earlier in March, K Bank finally listed on the tech-heavy Kospi, making good on a long-running promise to investors. All things considered, it did not go badly. K Bank was valued at 3.37 trillion won (about US$2.4 billion) and raised 498 billion won (about US$345 million). Still, pre-IPO, K Bank had promised investors an 8% annual return, which required it to achieve an IPO valuation of 4-5 trillion won. It is unclear just yet how coming up short will affect the company.

    Meanwhile, Toss Bank, South Korea’s third digital bank, is riding high as it heads towards a 2026 IPO in the United States. Toss achieved record financial performance for the 2025 fiscal year, with annual net profit expected to reach approximately 100 billion won (US$70 million). The bank’s success is attributed to a focus on diverse customer needs, including loans for individuals with mid-to-low credit scores and business owners. 

    Viva Republica is eschewing a domestic listing in South Korea to seek a better valuation overseas. While the company seeks a valuation of more than US$10 billion, it could potentially be valued at more than $15 billion if market conditions are optimal. The deal is expected to raise between US$2 billion and US$3 billion.

  • Kakao Bank Hits New Record In First 9 Months of 2025

    Kakao Bank Hits New Record In First 9 Months of 2025

    Kakao Bank, South Korea’s largest and most successful digital lender, posted a record cumulative profit in the first 9 months of the year of 375.1 billion won (US$259.1 million), up 5.5% over the same period in 2024. A diversified revenue base offset narrowing margins in interest income and was a key factor in its strong performance.

    Though interest income in the first three quarters fell 3.1% to 1.49 trillion won, non-interest income grew briskly. Derived from fee-based services, platform businesses, and asset management, non-interest income jumped 26.7% to 835.2 billion won. “Despite the falling interest revenue from loans, non-interest revenue has grown to support overall growth in operating revenue,” a spokesperson told The Korea Herald.

    Unlike many of its peers, Kakao Bank developed a successful business model almost from its inception (in 2017) and achieved profitability just two years later. It concentrated on attracting customers in its home market of South Korea to an ecosystem of digital financial services accessible through the ubiquitous messaging app, gradually adding in-demand products like stock trading and mortgage loans. Despite its impressive growth, Kakao Bank held off on international expansion until 2023, six years after its founding and about two years after it listed on the Korea Stock Exchange.

    As the company approaches its 10th year of business, its growth in Korea is finally starting to plateau—though it may not be evident at first blush. After all, monthly active users (MAU) reached an all-time high of 19.97 million as of September, the largest among all domestic banks, both digital and incumbent. Total customers, meanwhile, reached 26.24 million.

    Compare those figures with a year earlier, though, and one sees that growth has slowed from the go-go early days. At the end of 2024, Kakao Bank had about 18.9 million MAUs and about 25 million customers. So MAUs grew 9.4% and 9.6%.

    In Korea, Kakao Bank is increasingly competing with K Bank and Toss Bank, which, like Kakao, have developed a strong suite of retail banking products and enjoy the support of deep-pocketed, well-connected backers. In June, drawing on its close relationship with crypto exchange Upbit, K Bank became the first Korean digibank to announce plans for a cross-border stablecoin. K Bank is partnered with blockchain firm BPMG in a deal that includes a blockchain wallet, platform development, and stablecoin consulting. In September, K Bank said that it had completed the first phase of verification of Project Pax, a proof-of-concept project for overseas remittance technology using stablecoins between South Korea and Japan.

    While Kakao Bank is exploring the launch of a stablecoin, it has less experience in the digital assets sector compared to K Bank. The latter has been closely partnering with Upbit since 2020.

    In the medium and long term, Kakao’s tie-up with Grab, Singtel, and Emtek-backed Indonesian online lender Superbank will provide the Korean company with a strong foothold in the massive Indonesian retail banking market. While Indonesia is a competitive market, Superbank benefits from the large existing user base of its backers as well as their digital banking acumen. Case in point: Kakao has offered advice on the user interface and user experience of Superbank’s mobile banking service. Superbank’s automatic saving service, Celengan, was inspired by Kakao Bank’s existing product that allows customers to save small amounts every day automatically with a high interest rate.

    While a more mature and smaller banking market than Indonesia, Thailand also offers Kakao an opportunity to grow overseas. In June, Kakao secured final approval to establish Thailand’s first digital bank together with its local partner SCBX, the fintech arm of the large incumbent lender.

    Kakao is not only making history as the first Korean digital bank to enter the Thai market. The move also marks the return of the broader South Korean banking sector to Thailand. South Korean banks largely withdrew from Thailand after the 1997-1998 Asian Financial Crisis, which hit both countries hard.