Kakao, K-Bank Market Caps Halved as 'Platform Value' Disappears

The stock market value of internet-only banks Kakao Bank and K-Bank has plummeted compared to their peak. The corporate valuations of internet-only banks, which commanded high prices after their IPOs, have significantly shrunk, leading them to be valued lower than traditional financial holding companies.

The limitations of the internet-only banks' revenue structure have led to market neglect. They have focused solely on household loans, which are easy to handle non-face-to-face, leading to stalled growth due to the government's reinforced stance on managing household debt. Their strategy of operating primarily via mobile without physical branches has encountered regulatory barriers in areas like corporate lending, where on-site inspections are essential.

The four major financial holding companies—KB, Shinhan, Hana, and Woori—recorded profits of 5.238 trillion won in the first quarter, despite a contraction in household lending, by expanding corporate lending and managing net interest margins.

A professor of accounting at Soongsil University explained that internet-only banks need proactive deregulation to overcome their current crisis. He added that for secondary financial institutions, a structure based on lending against deposit assets means that lending regulations can lead to a decrease in deposits.

The crisis faced by internet-only banks reveals the limitations of a policy that attempts to confine innovative infrastructure within outdated regulatory frameworks, beyond the inherent limitations of their business structures. As long as the business environment persists, forcing them to rely solely on household loans while aiming for a platform model, the financial innovation dreamed of by internet-only banks may remain elusive. Critics argue that authorities must move beyond outdated regulations like 'non-face-to-face inspections' and create a space for genuine innovation.