S. Korea's financial regulator rejects 2 applications to establish internet-only banks

South Korea's financial regulator has rejected applications by two groups to establish internet-only banks.Our Ko Roon-hee explains why. Korea's financial regulator made an unexpected move on Sunday.The Financial Services Commission rejected two applications to set up internet-only banks... which would offer online banking and financial services...without having physical offices. The FSC accepted the views of outside evaluators who said... the first consortium led by Kiwoom Securities lacked innovation and feasibility,... and the other, led by financial technology company Viva Republica, lacked the ability for financing.The announcement comes as a blow to the Moon administration's push to reform the finance industry using internet-only banks...in order to promote innovative growth. "Since September last year, the South Korean government has pushed for the approval of new internet only banks. Through this, we expected to come up with a new driving force for innovative growth and increased competitiveness in the finance industry. I am very sorry that both consortia's applications were rejected."Currently, there are two internet-only banks in Korea.One is Kakao Bank operated by Kakao Corporation... best known for its mobile messenger service. Some analysts say the decision is partly due to the lack of success of these banks. According to the Korea Information Society Development Institute, only 13-point-5 percent of almost 9-thousand respondents said that they use internet-only banks. And although the assets of internet-only banks increased last year, the percentage of total bank assets held by internet-only banks stood at less than 0-point-5 percent as of September last year. The commission says... it will accept further applications during the third quarter of this year... and the two groups might try again... after fixing the cited problems.Ko Roon-hee, Arirang News.