Discussion on Fourth Internet Bank Reignites: "Finance Essential for SMEs" vs "Stability Must Be Ensured"

National Assembly Holds Forum on "Is Relaunching the Fourth Internet Bank Necessary?"

Participants Agree on Limitations of Existing Internet Banks

Clear Divisions Emerge Over the Speed and Design of Relaunching the Fourth Internet Bank

The debate over the fourth internet bank, which had come to a halt after all consortiums that submitted preliminary applications to the Financial Services Commission last year were rejected, has been reignited. However, there are still conflicting views: some argue that the fourth internet bank should be launched swiftly to provide productive financing for small business owners, the self-employed (SMEs), and startups, while others stress that ensuring funding stability and the feasibility of business plans is a prerequisite. As a result, it is expected that it will take some time before any real progress can be made.

Min Byungduk and Lee Jungmoon, lawmakers from the Democratic Party of Korea belonging to the National Assembly's Political Affairs Committee, Shin Jangsik from the Party for National Innovation, and Han Changmin from the Social Democratic Party held a forum on April 6, 2026, at the National Assembly Members' Office Building to discuss the necessity of reviving the suspended fourth internet bank under the theme, "Is it necessary to re-promote the fourth internet bank?"

Back in September last year, discussions on the fourth internet bank stalled after four consortiums (Soso Bank, Korea Soho Bank, Podo Bank, and AMZ Bank) failed to pass the preliminary review by the Financial Services Commission.

Both the lawmakers hosting the forum and industry players who had previously pushed for the fourth internet bank once again underscored its necessity. Min Byungduk of the Democratic Party of Korea stated, "Korean finance is in the blind spot of competition and the 'catfish effect'," adding, "I believe that it is necessary to re-promote the fourth internet bank."

Lee Inmook, Executive Director at Korea Credit Data, who previously led the Korea Soho Bank consortium, said, "Reviving the fourth internet bank is necessary to build a productive financial infrastructure," and added, "Now is the time to start, as there is a convergence of policy will, signals for reconsideration from financial authorities, and urgent demand from small business owners."

Industry representatives also noted that the fourth internet bank is needed not only for SMEs but also for the development of the startup ecosystem. Doh Hyunmyung, CEO of Impact Square, a specialist in impact investment acceleration, commented, "The fourth internet bank is a symbolic intermediary," and added, "It is time to ask whether society is ready to accommodate the demand for innovative financial services."

Clear Limits of Existing Three Internet Banks: Interest Income Structures Centered on Household Loans

Forum participants agreed that although existing internet banks such as KakaoBank, K Bank, and Toss Bank have positively contributed to the spread of non-face-to-face financial services, their business models, which are centered on interest income from household loans, have clear limitations.

Song Mintak, adjunct professor at Hanyang University Business School, who delivered the keynote presentation, also commented on the three existing internet banks (KakaoBank, K Bank, Toss Bank), saying, "The catfish effect has been insufficient."

Last year, household loans by the three internet banks amounted to 74.9 trillion won, but loans to individual business owners and SMEs were only 6.1 trillion won, indicating a lack of inclusive finance. In particular, the delinquency rates of internet banks ranged from 0.6% to 0.9%, which is higher than commercial banks. This structural issue makes it difficult to increase lending to SMEs or to borrowers with low or medium credit scores.

Min Byungduk and Lee Jungmoon, lawmakers from the Democratic Party of Korea belonging to the National Assembly's Political Affairs Committee, Shin Jangsik from the Party for National Innovation, and Han Changmin from the Social Democratic Party held a forum on the 6th at the National Assembly Members' Office Building discussing the necessity of reviving the suspended fourth internet bank under the theme "Is it necessary to re-promote the fourth internet bank?" Photo by Shin Jangsik's office

"Caution Against Excessive Competition" ... Preconditions Needed for Introducing the Fourth Internet Bank

Experts agreed on the need for a fourth internet bank but said a different approach from the current banking structure is required. They explained that intensifying competition could force banks to take excessive risks, leading to deterioration of bank asset soundness and increased customer risk.

Kim Youngdo, Senior Research Fellow at the Korea Institute of Finance, argued, "Granting additional internet bank licenses could delay achieving economies of scale and cause social losses due to overbanking."

He pointed out that new entrants would need to secure a certain level of assets and revenue base, but since Korea's financial sector is already highly competitive, there is little benefit to further market entry.

Kim also criticized, "In the current macroeconomic environment, where prolonged high interest rates and sluggish domestic demand are raising concerns about the soundness of the self-employed and vulnerable borrowers, expanding marginal lending based on unproven credit evaluation models would not only burden macroprudential management but could also create tail risks."

Yeo Eunjeong, a professor at Chung-Ang University's Department of Business Administration, pointed out, "Since commercial banks and guarantee foundations are already providing large-scale funding, there is no need to re-promote the fourth internet bank simply to increase the number of banks."

She added that even if the fourth internet bank is licensed, it should be limited to cases that eliminate financial blind spots based on innovative credit evaluation, while excluding household loans from the scope of business. Professor Yeo emphasized, "To ensure the initial focus on small business owners is maintained, structural safeguards must be put in place," adding, "It is necessary to specify requirements in the licensing conditions, such as mandatory small business-specialized lending or limits on the proportion of household loans."

Authorities Also Remain Cautious: "Impacts on the Financial System Must Be Considered"

Officials from the Financial Services Commission and the Financial Supervisory Service expressed that, rather than immediately stating their position on the fourth internet bank, they must cautiously consider the potential impact on the overall financial system.

Park Seongbin, Deputy Director of the Banking Division at the Financial Services Commission, said, "Authorities are also making efforts to encourage existing internet banks to expand loans to those with mid-to-low credit or under programs such as Saehopeulssi, and are relaxing overall credit provision regulations for local businesses and individual business owners so that banks can contribute more innovatively." He added, "When reviewing the fourth internet bank, the situation of funding for financially underprivileged groups, the possibility of suitable business operators entering the market, and competition in the financial sector must all be considered."

Lee Jongjin, Team Leader at the Bank Supervision Department of the Financial Supervisory Service, emphasized, "A banking license aims to provide timely funds to an unspecified majority, and because stability and public interest are extremely important, any issues can affect the entire financial system." He added, "At this point, if licensing is granted, we must thoroughly consider the potential impact on the financial system and proceed with caution."

This content was produced with the assistance of AI translation services.