Kakao's financial affiliates make successful first foray into Thai market

The Korea Times

The Korea Times

Finance

Tue, September 26, 2023 | 05:11

Companies

Kakao's financial affiliates make foray into Thai market

Posted : 2023-09-04 17:01

Updated : 2023-09-05 15:18

Kakao Pay's office in Pangyo, Bundang District of Seongnam / Courtesy of Kakao Pay

By Anna J. Park

Kakao's financial subsidiaries are making their successful first foray into the Thai market, after choosing Thailand as the main target country of their overseas business expansion. Kakao Pay began providing its payment services in the country last week, following KakaoBank's partnering with Thailand's leading financial group in June to pursue a virtual banking license there.

Considering even major domestic financial companies haven't yet encroached into the Southeast Asian country, due to the country's uniquely tight regulations on foreign financial firms, the incipient achievements by the Kakao affiliates in the largest economy of Southeast Asia are seen as a significant feat by market watchers.

Since last week, Kakao Pay's mobile and online payment service has become available at over 3,000 shops, including major department stores, pharmacies and stores in Thailand, as Central Retail, which is Thailand's largest retail group, began supporting the use of the Korean payment service at their stores.

Kakao Pay will also be available at Grab, Southeast Asia's leading super app that provides a range of services from mobility to finances, within the third quarter of this year. Kakao Pay can be used when a customer makes reservations for taxis or other vehicles for mobility.

While the service is mainly aimed at enhancing the usability of the payment service for domestic users, as they can make payments in Thailand through the Kakao Pay app, without the need for currency exchange, the firm plans to widen the availability of the mobile payment service in a global setting.

"We hope consumers can continue experiencing an easy and fast payment service through Kakao Pay," an official from Kakao Pay said. "The firm will actively expand collaborations with global partners to make Kakao Pay available in more countries as an all-in-one app," the firm stated.

KakaoBank CEO Yun Ho-young, left, and SCBX CEO Arthid Nanthawithaya shake hands at a signing ceremony of their partnership at the headquarters of SCBX in Bangkok, Thailand on June 15. Courtesy of KakaoBank

KakaoBank, the internet-only mobile banking subsidiary of Kakao, has also chosen Thailand as its first international market. Among local digital banking peers, KakaoBank is so far the only country that has sought partnership in foreign markets. The southeast Asian country's geographical advantage of proximity to other key countries, as well as the opportune timing of the burgeoning internet banking sector in Thailand, are ascribed as key considerations for the Korean digital bank's advancement into the country.

In June, KakaoBank signed an agreement with SCBX, a major Thai financial holding company, to form a consortium in order to obtain a virtual banking license in the Southeast Asian country. SCBX is the parent company of Siam Commercial Bank (SCB), which is the first bank ever established in Thailand in 1907, and it is one of the top three banks in the country operating nearly 700 branches nationwide.

KakaoBank aims to acquire the status of the second largest shareholder of the consortium, as it closely cooperates with the Thai counterpart in every step to build a competitive virtual banking consortium.

"We truly believe a strategic partnership with KakaoBank, a globally renowned and Korea's largest full-fledged digital bank, will significantly enhance our group's competitive advantage. KakaoBank's strengths lie in its distinctive expertise in developing virtual banking businesses with state-of-the-art technology. The signing of a consortium agreement marks a pivotal milestone as we prepare to apply for a virtual banking license with the Bank of Thailand," Arthid Nanthawithaya, CEO of SCBX, said.

KakaoBank's CEO Yun Ho-young said their cooperation could replicate KakaoBank's success in Korea's retail banking sector in the Thai environment.

"We believe our efforts will extend the benefits of full mobile banking services to our customers in Thailand and beyond. In order to strengthen the consortium's core competitiveness, SCBX and KakaoBank are jointly exploring opportunities to identify other strategic partners with the objective of winning a license to establish and operate a virtual banking business in Thailand," Yun said.

annajpark@koreatimes.co.kr