Domestic internet-only banks such as KakaoBank, K Bank, and Toss Bank are increasingly turning overseas as they actively pursue foreign expansion amid a rigid domestic market constrained by lending regulations. The domestic market is already saturated with intense competition centered on commercial banks, and business conditions have further deteriorated recently as lending regulations have been strengthened.

KakaoBank, the No. 1 internet-only bank in Korea, is entering Mongolia following Indonesia and Thailand. On the 8th, KakaoBank held a press conference at a hotel in Yeongdeungpo-gu, Seoul, and announced that it plans to export its proprietary non-financial data-based credit scoring model, the “KakaoBank Score,” to financial institutions in Mongolia. The aim is to transplant to Mongolia the alternative credit scoring model that has mainly been used in Korea for mid- to low-credit loans. KakaoBank CEO Yoon Ho-young said, “The entry into Mongolia is highly meaningful in that it exports KakaoBank’s inclusive finance capabilities to the global market.”

Mongolia is the third overseas market for KakaoBank after Indonesia and Thailand. KakaoBank first made an equity investment in Indonesia’s “Superbank” in September 2023. It subsequently injected a total of KRW 114 billion through follow-up investments. When Superbank was listed on the Indonesia Stock Exchange in December last year, the value of KakaoBank’s stake rose by more than KRW 200 billion, enabling KakaoBank to book approximately KRW 99.3 billion in valuation gains in the first quarter of this year (January–March).

Bank X, which KakaoBank established jointly with Thailand’s SCBX Group, is preparing to launch virtual banking services in the first half of next year (January–June). KakaoBank obtained a virtual banking license from the Thai government last year. Korean banks had withdrawn from Thailand after the 1997 Asian financial crisis, and KakaoBank has effectively achieved a re-entry into the Thai market for the first time in nearly 25 years. It plans to participate as the second-largest shareholder of the virtual bank to be established.

Other internet-only banks are also accelerating overseas expansion in various forms. K Bank, Korea’s second-largest internet-only bank, signed a memorandum of understanding (MOU) in February this year with Kasikornbank, Thailand’s largest commercial bank, and others for cooperation in overseas remittance and payments. K Bank will lead the development of cross-border payment and remittance systems, while Kasikornbank will provide its proprietary blockchain-based overseas payment infrastructure. Through this, the banks plan to support smoother remittance services for Thai nationals residing in Korea. K Bank has also signed an MOU with “Changer,” a digital asset company in the United Arab Emirates (UAE), to build a stablecoin remittance infrastructure.

Toss Bank, the third-largest internet-only bank in Korea, is also targeting the Southeast Asian market. Toss Bank CEO Lee Eun-mi had previously declared in May last year that the bank would “achieve overseas expansion into Southeast Asia and other global markets within the next three to five years.”

Some analysts say overseas expansion has become an “unavoidable choice” as the domestic financial market is saturated and stringent regulations are being applied even to internet-only banks, which are relatively latecomers. An industry official in the internet-only banking sector explained, “Since the financial authorities regulate the total volume of household loans at each internet-only bank by ratio, it is difficult to compete with commercial banks that have far larger assets than we do.”

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