Fintech unicorn Toss loses more partners after Shinhan's departure

Lim Chang-won Reporter Posted : 2019-03-22 16:57 Updated : 2019-03-22 16:57
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[Courtesy of Viva Republica]

SEOUL -- Toss, a fintech unicorn which benchmarked European digital challenger banks to open a new internet-only bank, lost more consortium partners after South Korea's leading financial group, Shinhan, pulled out due to a dispute over how to form a consortium and set a business direction.

Hyundai Insurance and several other consortium members quit the Toss consortium, following the footsteps of Shinhan Financial, which agreed with Viva Republica, the operator of Toss, on February 11 to jointly bid for an internet-only bank. They were required to send an application for preliminary authorization by March 27.

"We are still pursuing a new structure of shareholders who will participate in the establishment of an innovative internet bank and join hands with us to achieve financial innovation," a Toss official said on Friday.

While Toss has pushed for an innovative start-up system like a digital challenger bank, Shinhan has sought a financial eco-system based on open banking, which emphasizes inclusiveness and easy access.

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.

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.