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Toss Bank and the Toss app to be run separately

Mar 29,2019
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Viva Republica founder and CEO SG Lee laying out Toss Bank plan at the company’s headquarters in Gangnam, southern Seoul, Thursday. [YONHAP]
Toss Bank, a contender for one of the two new internet-only banking licenses, will be a separate entity from the Toss mobile payment platform, according to Viva Republica founder and CEO SG Lee.

He added that he will not be the CEO of the internet bank, but plans to pick someone new.

“Toss will not be the parent company of Toss Bank, and [Toss Bank] will have an entirely separate representative and separate organizational structure,” Lee said on Thursday.

“There will be no changes to Toss’ vision and strategy. It will continue as a platform business,” Lee added.

He said Toss Bank will be a financial partner of Toss, like any other financial institution, and noted that the financial products offered by Toss Bank will be strictly evaluated.

“If [Toss Bank] releases products that fail to be competitive, other business partners will be considered first,” Lee said.

He held a press briefing to lay out the vision of Toss Bank the day after Viva Republica, which developed Toss, submitted an application to the Financial Services Commission for an internet-only bank license.

A consortium led by Viva Republica is one of the three contenders vying for permission to open the next internet-only bank. The government will allow for a maximum of two new internet-only banks this year.

Another contender is Kiwoom Bank, a consortium of 28 investors led by the brokerage firm Kiwoom Securities.

A total of eight investors are financing Toss Bank. Viva Republica will hold the majority, with a stake of 60.8 percent. Hanwha Investment & Securities will own 19.9 percent, and a number of international venture capital investors - including Altos Ventures, Goodwater Capital and Ribbit Capital - will have the remaining 19.3 percent.

Lee said these investors will be strictly participating as passive investors and will not get involved in management.

Lee expressed his confidence in raising the investment that will be needed in launching the internet-only bank, especially emphasizing venture capital involvement.

“If I wasn’t confident, I wouldn’t have jumped in,” Lee said.

“One of the main characteristics of the foreign venture capitalists is that they are long-term investors,” he said. “When the transfer service of Toss was shut down for a year, as its legality was unclear, Altos Ventures invested $1 million,” Lee said. “Altos Ventures is also a major shareholder of [leading start-ups], such as Coupang, Baedal Minjok, Jikbang and Tada, and has a history investing for more than 10 years.”

He said Toss Bank’s goal is to provide the best financial products, especially for those with limited credit history or small businesses. The bank will evaluate credit by utilizing data that has been collected through its Toss wiring service and also additional information provided by business partners, such as Baedal Minjok, Korea’s largest delivery app, as well as Jikbang, a growing real estate app.

With the data analysis, it will then recommend financial products that will be customized to the individual clients or business segments.

“The persistent problem in the Korean financial market has been the lack of mid-level interest-rate loans,” Lee said. “And the reason for this is because there hasn’t been adequate credit evaluation on thin filers, those with mid-level credit scores and small business owners. As a result, banks have had to charge higher rates.”

He said small businesses have had to borrow funds unsecured despite having businesses that generate revenues because they weren’t able to get the appropriate evaluation based on the earnings that they made from their businesses. They have been evaluated on their personal credit.

Lee said the massive data from the Toss mobile payment platform, as well as that of its partners, such as Baedal Minjok, will help make better credit judgments on those seeking loans.


BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]