K-Bank will open an era of the internet-only bank in South Korea as early as next month after it got the final nod from the country’s financial authorities to kick off its commercial banking business.

Financial Services Commission (FSC) on Wednesday approved online-only K-Bank to start its commercial banking service, allowing K-Bank to become the country’s first internet-only bank. This is also the first permission of new commercial bank operation in the country since Pyeonghwa Bank obtained its approval 24 years ago.

K-Bank’s business will be spearheaded by Korea’s major telecommunications company KT Corp. with an 8 percent stake in the mobile-only bank, while Woori Bank, GS Retail Co., and Hanwha Life Insurance Co. will also take parts in the business as major shareholders with 10 percent stake, each. NH Investment & Securities Co. joined the business with an unidentified stake in the new internet-only bank. DGB Financial Group also joined K-Bank as the country’s first regional bank after it acquired a 3.2 percent stake in K-Bank from Bankware Global Co. through its subsidiary DGB Capital Co.

K-Bank aims to embark on its sales operation as early as the end of next month. The bank sets a target to achieve 400 billion won (338 million) in loan sales next year and become Korea’s leading mobile bank with 15 trillion won assets in 10 years, said K-Bank Chief Executive Officer Shim Sung-hoon at a press conference held after the FSC granted approval of K-Bank. Shim expected that it would take roughly four years for the bank’s earnings to return to profit.

The bank has not yet set deposit and loan interest rates, but it expects its customers would benefit from the internet-only banking service more than traditional commercial banking services, as the internet-only bank that does not require any face-to-face banking transaction services will be able to cut personal and real estate expenses, Shim said.

The internet-only bank will first begin its operation with personal banking service and expand into other areas such as foreign remittance towards the end of next year. As for corporate banking, K-Bank explained it will take a while before it provides the service due to the complexity of work process requiring face-to-face meetings, explained Shim.

A key challenge would be how it can differentiate its services from existing mobile banking services that have been already provided by individual commercial banks, industry observers said.

Upon the approval of Korea’s first internet-only bank, FSC Chairman Yim Jong-yong urged all employees of K-Bank as well as financial authorities to hold a strong sense of responsibility and firm business ethics to lead the country’s internet-only banking industry to the success.

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