[Financial Microscope] Internet-Only Banks Targeting Children and Teenagers as 'Future Customers'

Offering High Interest Rates Up to 7.5%

Debit Card Products Linked to Children’s Accounts

Online Account Opening Drives Popularity

Supreme Court Restrictions on Scraping Highlight Need for Alternatives

The three domestic internet-only banks are strengthening their strategies to attract potential “future customers” such as children and teenagers. In addition to offering products with high interest rates, they are enhancing accessibility by connecting them with services like debit cards.

According to the financial sector on September 2, as of August 12, the cumulative number of users for KakaoBank’s “My Child Account” (Woori-Ai Tongjang) and “My Child Installment Savings” reached 800,000 in just 10 months after their launch. The total number of “My Child Account” subscriptions also surpassed 410,000. Notably, among approximately 1 million new KakaoBank customers in the first half of the year, 210,000 signed up for the “My Child Account,” demonstrating its popularity. The “My Child Installment Savings” offers a base annual interest rate of 3% and an additional 4% points for automatic transfers, for a maximum annual rate of 7%. The subscription period is 12 months, and you can deposit up to 200,000 won per month. If the account holder is under 18 at maturity, the plan is automatically extended. The service also provides features enabling communication between parents and children. When parents make deposits or withdrawals, they can leave messages and emoticons such as “First Steps Day” or “First Pocket Money,” which children can view and respond to by clicking “like.” Parents can also upload a photo of their child on the “My Child” tab in the service screen.

Toss Bank was the first internet bank to introduce a children’s account in October 2023. As of August 17, the cumulative number of Toss Bank Children’s Account subscriptions exceeded 1.3 million. The product lineup also includes “Children’s Installment Savings” and “Prenatal Installment Savings.” The Children’s Installment Savings plans can be set up by a guardian for children from birth to age 15. With a base annual rate of 2.5% and an additional 2.5% points for automatic transfers, the maximum annual rate is 5%. Deposits of up to 200,000 won per month can be made for up to 12 months, and the subscription will automatically renew upon maturity. Prenatal Installment Savings allows expectant parents to enroll, and after the child is born, they can open a Children’s Account in the child’s name to receive up to 5% annual interest. From June, Toss Bank lowered the minimum age for debit card issuance from 12 to 7, enabling customers aged 7 and older who use the Children’s Account to receive a debit card under their own name.

K Bank also joined the competition for children's accounts this year. After launching the “My Kids Account and Installment Savings” in May, the product attracted more than 10,000 subscribers in just two weeks. The “My Kids Installment Savings” offers a subscription period of one to five years and a base annual rate of 3.50%. If monthly deposits are successful, a preferential rate applies, allowing a maximum annual rate of 7.50%. Deposits are capped at 300,000 won per month, and automatic renewal is available until age 17.

The key feature of these children’s accounts is that they can be opened entirely online, without lengthy paperwork. This convenience has helped drive their popularity. However, due to Supreme Court restrictions on “scraping,” banks are now required to adopt alternative methods. The Supreme Court had planned to limit scraping of the family relations registration system starting August 20, citing concerns over the misuse of personal data and system overload, but decided to grant a grace period. The grace period applies to institutions that applied by August 31, and all three internet-only banks reportedly submitted their applications.

Scraping is a function that allows companies to log in to public institution websites on behalf of customers and retrieve the necessary information. If scraping is restricted, customers must obtain and submit family relation certificates directly to financial institutions. Concerns were raised that this could disrupt online financial transactions, so the Supreme Court allowed extra time for banks to transition to alternative solutions. Some suggest that replacing scraping with an application programming interface (API) or adopting a public MyData method may be possible.

An official from an internet-only bank stated, “We are continuously planning and developing products and services for children and teenagers to capture them as future customers—so that they continue using our financial institution into adulthood. While the Supreme Court’s grace period for scraping restrictions provides some temporary relief in opening children’s accounts, we believe a sufficient preparation period is still critical for any transition to alternative methods.”

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