Online lending-savings bank tied loans top W800b, with Toss set to enter market

Cumulative mid-rate personal credit loans jointly handled by online investment-linked finance companies and savings banks have surpassed 800 billion won ($598 million), as Toss moves to enter the market by establishing a dedicated subsidiary.

According to the Online Investment-Linked Finance Association, the cumulative volume of such linked loans stood at 833.4 billion won as of Oct. 9, up 38.8% from the end of July. Outstanding loan balances also rose 36.3% over the same period, climbing from 508.2 billion won to 692.6 billion won.

The linked-loan model combines the credit-assessment capabilities of online investment-linked finance firms with the funding capacity of savings banks to extend mid-rate personal credit loans to borrowers with low-to-mid credit scores. Designated as an innovative financial service in July 2024, the product began generating loans in May last year and has grown consistently since. Industry observers say the online investment-linked finance sector is now laying the groundwork for broader expansion.

Financial regulators are also pushing to expand mid-rate lending through the sector. In September, authorities announced plans to introduce a scheme recognizing top-performing online investment-linked finance firms in low-to-mid credit lending. Firms that had previously focused on real estate project financing and share-backed loans are increasingly moving into personal credit lending as well.

Against this backdrop, Toss established a subsidiary called Toss Poyong Junbi Beobin — its online investment-linked finance preparation entity — on Oct. 16. The company has signed a linked-investment agreement with DB Savings Bank and, according to savings bank industry sources, is in working-level discussions with several other savings banks about potential partnerships.

Toss has until now brokered online investment-linked finance products through its existing loan comparison and recommendation platform. Going forward, the company is exploring plans to directly supply personal credit loan products to low-to-mid credit borrowers using its own credit-scoring technology.

To begin operations, the company must first obtain a membership-pending certificate from the association and then apply to the Financial Services Commission for registration as an online investment-linked finance operator. The process also requires a regulatory review and system integration with the Korea Federation of Savings Banks, meaning the earliest likely launch is early next year. However, Toss has yet to apply for the membership-pending certificate, so no specific start date has been set.

Within the online investment-linked finance industry, concerns have been raised about a potential conflict of interest in Toss's business model, which would see the company simultaneously brokering and supplying loan products. Critics point out that Toss could give preferential exposure to its affiliate's products on its loan comparison platform. Toss has said it will apply the same standards to its affiliate's products as to those of existing operators, with no preferential treatment.