South Korean digital-native lenders are scaling up their corporate footprint and diversifying beyond household lending, as strict regulatory limits reshape the domestic banking sector.
KakaoBank Expands Small Business Loan Reach Through Naver Pay
Previously, KakaoBank distributed these products exclusively through its proprietary application to leverage its user base of millions of customers. The bank previously added its small business property-backed mortgages to the Naver Pay platform in June.
The Naver Pay loan comparison service allows consumers and entrepreneurs to evaluate rates and credit limits across commercial banks, savings banks, and capital companies. With KakaoBank joining K Bank and Toss Bank on the platform, all three major South Korean internet banks now feature their small business credit offerings in a single comparison channel. Company representatives stated that external distribution channels remain necessary to acquire new commercial borrowers outside the proprietary app ecosystem, noting that the KakaoBank business banking segment served approximately 140만개 registered proprietors as of November last year.
Household Loan Regulations Drive Growth in Business Portfolios
Stringent household debt caps imposed by regulators have forced internet-only banks to pursue alternative lending avenues, triggering a surge in corporate and proprietor financing.
Individual bank figures highlight varying portfolio strategies among the institutions:
- KakaoBank: Reached a small business loan balance of 3조6870억원 won, up 45.2% over a 12-month period.
- K Bank: Expanded its small business portfolio to 3조3010억원 won, marking a 108.7% surge year-over-year.
- Toss Bank: Recorded a balance of 1조3372억원 won, reflecting a 4.9% decrease as management deliberately slowed down loan deployment to protect asset soundness and manage delinquency risks.
New Mortgage Products and Next Year’s Corporate Market Push
While growing small business lending helps bypass retail credit restrictions, lenders face persistent risks regarding asset quality and default rates during economic downturns. To balance these exposures, internet banks continue to roll out specialized household debt products. KakaoBank launched a digital apartment잔금대출 (balance payment loan) this month, shifting a previously branch-heavy financing process into a fully remote mobile experience offering maximum limits of 10억원 won and repayment terms up to 40 years. Meanwhile, Toss Bank initiated internal employee testing for its upcoming mortgage product lineup covering apartments, row houses, and multi-household villas ahead of a planned commercial launch.
Looking toward next year, corporate lending is slated to become the next battleground for digital lenders. K Bank is preparing a non-face-to-face lending service targeting small and medium-sized corporate entities with a targeted release in the third quarter of next year. Toss Bank is similarly developing guaranteed loan options aimed at small enterprises. These operational expansions follow a July decision by financial authorities to selectively relax physical branch restrictions for internet-only institutions, providing the legal foundation necessary to scale corporate banking operations.
Keep reading