A nominee for the nation’s financial watchdog on Sunday addressed the need to ease ownership regulations on non-financial entities in the banking sector to promote additional launches of internet-only banks.

Choi Jong-ku, the nominee for chairman of the Financial Services Commission, said a pending bill on easing up Korea‘s existing banking laws to accommodate non-financial industries owning bank stakes, should be decided considering the nature of internet-only banks designed to cover retail finances.

“Internet banking can be a catalyst for the development of the Korean financial industry,“ said Choi in a written statement to the National Assembly on Sunday.

In his statement, Choi emphasized that while the basic principle of segregating non-financial and financial industries in terms of stake ownership should be respected, Choi added that internet banking is not a traditional bank, rather a ”new financial business“ that combines IT and finance.

Choi said that the new era of internet-only banking should be considered as a catalyst for the development of the country’s financial industry, such as increased competition among financial institutions to offer more convenient financial services at lower prices.

According to the banking act, non-financial institutions are only permitted to hold 10 percent ownership of banks, while only being allowed to exercise up to 4 percent of their voting rights.

However, in light of growing popularity of internet-only banks, the government has been seeking to amend Korea‘s banking law to ease its stake holding regulations so that non-financial industries can hold up to 50 percent stake in online banks. The new amendment would permit corporate firms such as Kakao to have increased ownership in its own internet banking institution.

K-bank, which started operations on April 3, grew tremendously as its subscribers surpassed 400,000 and deposits and loans surpassed 600 billion won each in the first 100 days of its launch.

Kakao Bank, where Korea Investment Holdings and Kakao hold a 58 percent and 10 percent stake, respectively, is preparing to launch its services sometime at the end of this month.

”In order to accelerate innovation in the field of financial services and to promote competition and innovation among Internet banks, it is also necessary for a third player to enter after K-bank and Kakao Bank,“ Choi said, alluding to further growth in Korea’s online-only banking market.

By Julie Jackson (juliejackson@heraldcorp.com)