South Korean fintech startup Viva Republica, the PayPal-backed creator of financial services platform Toss, announced that it has secured preliminary approval for a license to operate its digital bank, Toss Bank, in Korea.
Toss Bank will become the third digital bank in South Korea to operate without a physical branch. The other two are Kakao Bank, which was launched in 2017, and K Bank, the nation’s first online-only bank. As of the end of March this year, Kakao Bank had 8.91 million customers and K Bank had around 980,000 users.
Toss Bank is expected to begin operations soon after gaining a final approval for its licence in the first half of 2021, the fintech startup said.
Viva Republica said Toss Bank will provide “groundbreaking new financial services” for the $1.3-trillion Korean banking market. The digital bank licence from the Financial Services Commission of Korea allows Toss Bank to offer current accounts, credit and loan products, and other financial services to individuals and businesses.
“With digital bank license, we will be able to broaden our product offering even, so that we can accelerate our mission to innovate the financial industry,” said Viva Republica CEO SG Lee.
Founded in 2013, Viva Republic launched Toss four years ago as a peer-to-peer (P2P) money transfer service. It has since evolved into a platform providing a range of financial services, including banking, money transfer, dashboard and credit score management.
Toss claims to have been downloaded more than 30 million times and have over 16 million registered users, or over a fifth of South Korea’s population. It boasts of processing total transactions worth more than $48 billion.
The fintech startup had raised $64 million in its latest funding round led by Hong Kong-based equity investor Aspex Management in August this year. The funding had boosted the company’s valuation to $2.2 billion.
South Korea’s digital banking sector offers its own share of challenges. The country’s existing digital banks Kakao Bank and K Bank registered net losses of 21.2 billion won ($18 million) and 79.7 billion won ($68 million) in 2018, respectively, according to data by the Korea Federation of Banks.