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South Korea’s Success story of KakaoBank: from text messaging app to leading mobile-only-bank platform

Written by Moonju KIM

If you look at your bank mobile application, you can see it has been changing dramatically over the last few years. Actually, even if you think of the functions and options available just one year ago, you can feel how it keeps on being more and more convenient and powerful. People have thus been educated to use bank mobile applications and use them as easily as any text message app. Traditional banks are now heading to this digital era by developing more and more tools and applications, while at the same time facing the rise of all digital platforms.

 

Here is the example of how a pure mobile bank from South Korea became successful with unique and different marketing strategies.

KakaoBank, one of South Korea’s first digital-only banks, was launched in 2017, with integration with KakaoTalk, which is the most popular messaging app in the country. It allowed users to connect with people in their contact list from KakaoTalk and make financial transactions with them.

 

 

Within 24 hours of opening in July 2017, it attracted 300,000 subscribers and it is now on the way to exceeding 10 million users with 16 trillion won in deposit balance and 10 trillion won in the loan balance. It is actually not surprising if you know the messaging app, Kakaotalk already has 42 million active users out of the 50 million population in the country. However, what is it that is making Korea public so enthusiastic about KakaoBank?

 

According to the representative customer survey, the top key strength factors using KakaoBank were: (in order of importance)

  • easy to transfer without a certificate
  • easy to use
  • low fee
  • easy to open an account (no documents required)
  • availability
  • good interest rates.

 

Could technology reduce the number of steps customers needed to take to open accounts or access finance? How can we make the process far more convenient and far more accessible? says Young-Suk Kim, Korea Digital Lead and APAC Financial Services Performance.

 

Banking made easy: “Open an account in just 7 minutes”

As mentioned, one of the main reasons for using KakaoBank is its ease to use. While opening an account with a traditional bank requires numerous documents and steps to follow, the only document required for KakaoBank is a photo of your ID card. The whole process takes about 7 minutes. When it comes to transferring money to another account, KakaoBank only requires a fingerprint certification procedure, not the one-time password device (OTP) process that is still required by traditional bank’s online service in Korea.

 

 

More services by Kakao

KakaoBank also provides loans with lower interest rates at 2.86% compared to the 6-19% range of traditional banks. Like opening an account and sending money, it takes only minutes to receive a microloan. This high-speed service and convenience are attracting more and more people to open loan accounts.

Kakao has been very popular in the first place because of its range of characters, known as Kakao Friends. May young people follow them and crave for more merchandise and the famous emoticons, many of them available for purchase on the app. Kakao used this growing fandom to attract new and young customers, who in most cases open their first bank account at KakaoBank, just to have the check card featuring images of the famous characters.

Looking at Korea’s success story of KakaoBank, digital banks are becoming the new driving force of the banking system: they provide the same quality of services and are also able to develop new ones that fit the public’s ever-changing demands. KakaoBank proved that strong and efficient innovation means to take into account the clients’ needs by collecting the information directly from them through surveys for example. Kakao has demonstrated that a digital bank and platform can be close to its clients and provide them with safe and innovative services.

To what extent has your bank been able to be closer to you in this digital age?

 

Image credit: KakaoBank

 

 

About the author

Moonju KIM

With my experience working in the international development sector, I write articles about innovation and creativity.

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