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| The Kakao's Pangyo office in Seongnam, Gyeonggi Province, Oct. 17 Yonhap |
By Yi Whan-woo
KakaoBank faces a bumpy road ahead in the banking business over the recent service outage of its parent company, Kakao, which revealed a serious shortfall in tech expertise and crisis management abilities.
This shortfall comes after Kakao, one of the country's tech giants, capitalized on its prowess as a platform operator and relentlessly advanced into industries earmarked for smaller firms.
Under these circumstances, whether KakaoBank, an internet-only lender, can continue to appeal to investors amid the shift to digital banking remains in question, according to analysts, Sunday.
"KakaoBank is certainly one of the most competitive mobile lenders, but it is expected to make less-than-expected profits for the time being," said Kiwoom Securities analyst Seo Young-soo.
Seo noted that KakbaoBank closed at 16,750 won per share on the benchmark KOPSI, Friday, down 0.59 percent from the previous day's close, in the wake of the major fire that erupted on Oct. 15 at a data center, knocking out Kakao's services.
While the service disruption left multiple Kakao affiliates struggling on the stock market, the share price of KakaoBank in particular plummeted 71.99 percent compared to its year-high, set on Jan. 3.
"Such falls in stock prices suggest investors are increasingly doubtful about Kakao's growth potential after the service disruption," Shinhan Securities analyst Eun Kyung-wan said.
Eun assessed that KakaoBank used to have an edge over offline banks by offering lower borrowing rates, but not any longer, as virtually all lenders are raising their rates in accordance with the Bank of Korea's (BOK) hikes of the base interest rate in recent months.
KakaoBank underscored that its fire-disrupted services are fully normalized and that it will "continue to make efforts to safeguard customers' assets and privacy."
"But even so, whether KakaoBank's commitment will pay off is now uncertain as the politicians increasingly want to meddle into Kakao's business expansion," a political commentator said on condition of anonymity.
Kakao's expansion has been criticized for its blind pursuit of profits in the style of Korea's chaebol companies, and the National Assembly is moving to legislate an act aimed at preventing similar attempts at monopolies by big tech firms..
"The need to prevent monopolies has been addressed by the people, and the rival party lawmakers should meet head-to-head to discuss measures to serve the people's wishes," Ruling People Power Party (PPP) floor leader Rep. Joo Ho-young said.
Main opposition Democratic Party of Korea (DPK) floor leader Rep. Park Hong-geun stated a similar view, saying, "The government should no longer let tech firms solely control platform-related businesses."
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