Kakao Bank's small-business banking service tops 1.7 million users four years after launch

Kakao Bank said Monday that its small-business banking service has surpassed 1.7 million subscribers, four years after the platform's launch.

Kakao Bank introduced the service in November 2022 with the stated goal of becoming the financial platform used by the largest number of sole proprietors in South Korea. The subscriber count crossed 1 million at the end of 2024 and surpassed 1.7 million as of the end of October this year.

The total amount Kakao Bank has supplied to sole proprietors through credit loans, guarantee-backed loans, interest-subsidized guarantee loans and real estate-backed loans reached about 7 trillion won ($5.23 billion) as of the end of October.

Three in five sole proprietors who received financing were borrowers with mid-to-low credit scores. The bank said it has improved financial access for small-business owners by refining its credit-scoring model to reflect the specific characteristics of sole proprietors.

Kakao Bank has also worked to reduce borrowers' financial costs. Since launching its guarantee-backed loan product in 2023, the bank has expanded cooperation with regional credit guarantee foundations, and this year became the first internet-only bank to complete interest-subsidy agreements with all regional credit guarantee foundations nationwide. Through those arrangements, the bank said it helped customers save 28 billion won in financial costs via guarantee fee support and cashback benefits, and an additional 24 billion won through interest-subsidized guarantee loans.

The real estate-backed loan for sole proprietors, which Kakao Bank launched in October last year, allows borrowing of up to 1 billion won and has been offered at an average annual interest rate of 3.74 percent since its debut. The current rate ranges from a low of 3.04 percent to a high of 7.89 percent per year.

Beyond financial products, Kakao Bank has also expanded services designed to help customers manage their businesses.

From the outset, the platform allowed users to open accounts and apply for loans entirely through a mobile app, without visiting a branch or submitting cumbersome paperwork. The bank has also used data scraping and public MyData services to improve convenience, and integrated personal and business banking into a single app.

Kakao Bank said it plans to continue reducing the financial burden on sole proprietors and to broaden its lineup of products and services.

This month, the bank will launch a refinancing product that lets sole proprietors move existing loans from other financial institutions into Kakao Bank's real estate-backed loan. Next year, it plans to roll out a joint lending product with Busan Bank, expanding into corporate finance. The bank said the move is aimed at improving capital access for regional businesses and strengthening productive lending.

"Four years ago we set out with the goal of becoming the financial platform used by the most sole proprietors, and we have now grown into a platform chosen by 1.7 million business owners and visited by more than 1 million people every week," a Kakao Bank official said. "We will continue to lower the financial burden on sole proprietors and expand services that provide real, practical help in running a business."

Last month, Kakao Bank received Financial Services Commission chairman commendations in both the "innovative finance" and "savings and investment" categories at the 11th Financial Day ceremony.