Aju Business Daily

SEOUL -- Toss, a fintech unicorn which benchmarked European digital challenger banks to open a new internet-only bank, claimed to have secured friendly forces from abroad after South Korea's leading financial group, Shinhan, and other domestic partners withdrew from a consortium.

Initially, Viva Republica, the operator of Toss, had tried to bid for an internet-only bank and send an application for preliminary authorization by March 27, but Shinhan, Hyundai Insurance and other partners quit the Toss consortium last week. While Toss wants an innovative start-up system like a digital challenger bank, Shinhan has sought an open banking system, which emphasizes inclusiveness and easy access.

Viva Republica said Monday that it has secured new consortium partners, including Altos Ventures, a venture capital firm based in Silicon Valley, Goodwater Capital which invests in Britain's challenger bank Monzo, and Ribbit Capital, the investor in Brazil's challenger bank Nubank and British challenger bank Revolut.

Digital challenger banks have raised more venture capital than any other fintech vertical in Europe. The rise of challenger banks was enabled by new regulations that make it easier than ever to start a bank. They operate through a simple business model that provides them a cost advantage.

South Korea's top food delivery service Baedal Minjok and Jikbang, a leading real estate app service provider, will not participate in the Toss consortium, but they agreed to maintain close business cooperation. Toss said it would use its financial mobile platform to provide optimized services for individual clients and small business operators.

Since it was rolled out in 2015 as a peer-to-peer payments service, Viva Republic has seen dramatic growth, entering the unicorn club of tech companies valued at $1 billion and raising enough money from foreign investors including Singapore's GIC. Now, the fintech startup claims to have ten million users for Toss, which allows users to access and manage credit, loans, insurance, investment and more from financial service providers.

Another consortium in the race to open a new internet-only bank has been formed by Hana Financial, SK Telecom and Kiwoom Securities, which provides online brokerage services. The three companies called for the combination of banking services with artificial intelligence, big data and ICT.

Two internet-only banks, K bank and Kakao Bank, have gained popularity by providing diversified loan services and easy lending to young smartphone users. They have forced commercial banks to renovate their online and mobile banking services.