Kakao, the owner of South Korea’s largest mobile messaging app, has confirmed that both Tencent and eBay will join their bid for a coveted online banking license. The license is expected to be released by the government later this year.
Tencent and eBay will each take a stake in the new bank of no more than four percent should the license be granted, according to a spokesperson, though Kakao has declined to comment further on the details of the deal.
Kakao has already released a wallet service linked to their app called BankWalletKakao. They partnered with Korea Financial Telecommunications and Clearings Institute as well as 16 other banking institutions to launch the service which can link to bank cards.
For Tencent it marks their first foreign foray into online banking, as they invest strongly in expanding their own banking service at home. Early this year they launched WeBank after they received approval for their own online banking license last year. They have since expanded aggressively into online loans and e-retail.
Tencent’s primary competitor, Alibaba, opened their own internet bank in June, building off their personal wealth fund Yu’e’bao. They have also leveraged their expertise in online finance overseas, this week announcing a $500 million USD investment in India’s largest mobile wallet company PayTM. PayTM was one of 11 Indian services recently granted a conditional online banking license.
Unlike India and China, who have both offered 10 or more online banking licenses, the South Korean government is expected to hand out only one or two this year. Kakao will have to bid against at least two other contenders, though their partnership with Tencent and eBay may sweeten the deal.
eBay’s bid will mark their first move into the finance sector since splitting with Paypal earlier this year.