plan to continue developing innovative and customer-focused products and services. We will also work closely with financial authorities to ensure that our growth is sustainable and does not contribute to an increase in household debt. Our goal is to continue providing cheap and fast mortgage loans to our customers while maintaining stability and soundness in our operations. We are committed to being a leader in the internet-only banking industry and to meeting the needs of our customers in a responsible and ethical manner. Thank you for the opportunity to share our story.
On the 30th of last month, Kim Seong-gyun, manager of K Bank’s housing finance camp, is interviewed by Chosun Biz at K Bank’s headquarters in Euljiro 4-ga, Seoul. /Reporter Kim Soo-jeong
K Bank promotes functionality to maximize convenience for customers. To this end, we speed up the process of implementing mortgage loans and provide customers with low interest rates without favorable conditions. Our aim is to create a ‘cheap and fast’ financial ecosystem using only the features of internet banks, such as non-face-to-face finance.
Kim Seong-gyun, manager in charge of apartment mortgage loan planning (Adam University) at K Bank’s Housing Finance Camp, said this in an interview held at K Bank’s headquarters in Eulji-ro 4-ga, Seoul on the 30th of the month last . Manager Kim said, “Usually, there is a strong image that home loans require complicated and difficult procedures compared to other loans.” He added, “At K Bank, customers can get their livelihood stabilization funds in 2 days, refinance loans in 3 days, and home purchase funds in 4 days “This is the only bank that can accept it,” he emphasized.
Internet-only banks have managed to increase interest profits by increasing the proportion of mortgage loans this year. In the case of K Bank, interest income in the third quarter of this year was KRW 115.6 billion and loan balance was KRW 12.81 trillion. Specifically, the share of mortgage loans among total loans expanded from 19.9% in the third quarter of last year to 32.9% in the third quarter of this year, growing by around 13 percentage points in a year.
The reason why internet-only banks have started selling aggressive loans this year is that it is difficult to manage profitability and soundness with credit-only loans. As internet-only banks increase the size of credit loans, they must extend more credit loans to people with low to medium credit. This is because the annual target for the proportion of people with low to medium credit is set. However, as the number of loans to those with low and medium credit increases, the number of non-performing loans also increases and the delinquency rate increases. On the other hand, home loans are classified as fixed loans because they use a house as collateral. Even if a delinquency occurs, most of the principal can be recovered by selling the house at auction or receiving a proxy from a government agency.
In August 2020, K Bank launched Adamdae, the industry’s first 100% faceless mortgage loan. Adam Dae, who was not face to face with K Bank, caught the attention of the banking industry and consumers when it was launched. It was evaluated as a product that greatly expanded the strengths of internet-only banks by offering the convenience of being 100% non-face-to-face and offering up to 1 billion won and a minimum annual interest rate of 1.8% at the time. According to an actual K-Bank survey, 44% of customers who handled Adam University loans expressed satisfaction with non-face-to-face services, 38% with convenience, and 14% with low interest rates. Next is a question and answer session with Manager Kim.
On the 30th of last month, Kim Seong-gyun, manager of K Bank’s housing finance camp, is interviewed by Chosun Biz at K Bank’s headquarters in Euljiro 4-ga, Seoul. /Reporter Kim Soo-jeong
—Tell us about the characteristics of Adam Dae, K Bank’s main dam.
“’Cheap and fast’ are the biggest features of K-Bank Adamdae. Unlike commercial banks, K Bank Adam University offers the lowest interest rates in the industry without complicating factors such as preferential interest rates. As of today, the lowest interest rate at K Bank Adam University is 3.70% per annum. On the same day, the minimum interest rates of the five major banks (KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup) were established in the range of 4.42-5.34% per annum, showing that even among the lowest interest rates, there a difference of up to 1.64% point. Also, K Bank Adam University is fast. For livelihood stabilization funds, loans can be made as early as the next day, and for refinance loans or home purchase funds, the review is completed in approximately two to four days. Commercial banks take at least a week or more. “In the case of the livelihood stabilization fund, it can be implemented immediately on the day of approval and is also notable in that it can be implemented even on weekends.”
—Is there a secret to getting a mortgage loan cheaper and faster than a commercial bank?
“First of all, unlike commercial banks, K Bank does not have offline stores, so it can be competitive in interest rates by reducing sales and management costs. In order to create a quick loan execution system, K-Bank Housing Finance Camp wanted to make the screening process as efficient as possible. For example, the process of customers having to submit proof of employment, proof of income, and certified copies of their certificates in person was automated through the introduction of Public My Data. Interest rate and limit review was also reduced from a complex process to one. K Bank has increased speed by automating various documents that commercial banks review manually. The main purpose here is to maximize customer convenience. If customers get loan screening results quickly without being face-to-face, they can reduce the time they spend worrying. In this regard, K Bank focuses on a quick loan system. “
—There must have been difficulties in the process of introducing a face-to-face mortgage payment for the first time in the industry.
“K Bank was the first in the industry to introduce an electronic reimbursement power of attorney, making 100% non-face-to-face reimbursement possible. With the digital transformation, the number of non-face-to-face credit loans has increased, but mortgage payments have only been made face-to-face. This is because in the case of a home loan, a bank mortgage is required and loans are often transferred from other banks, which involves complex documentation and registration work. In preparation for the launch of Adam University, the revision of the Internet Banking Act was delayed only due to regulations relating to mortgage lending, and lending operations were suspended for a period. During that time, efforts were made to develop an electronic power of attorney system re- pay Subsequently, various relevant ministries received permission to introduce an electronic reimbursement power of attorney, which enabled customers to complete the delegation process by signing electronically without the need to issue a separate seal certificate. “We have set up a 100% face-to-face mortgage payment system.”
—The proportion of mortgage loans among all loans increased by 13 percentage points in one year. What is the secret?
“K Bank Adam University’s refinance loan customers account for about 50% of the total handled by Adam University. People who buy an apartment for the first time often go to a commercial bank and receive a mortgage. However, after receiving a home loan, there is a tendency to refinance to a place with a lower interest rate. Accordingly, the proportion of customers who refinance their mortgage with K Bank, which has lower interest rates than commercial banks, is increasing. In addition, the non-face-to-face home loan market has grown as Kakao Bank also launched a home loan service last year. “As the awareness that home loans can be made without face-to-face is spreading, especially through internet-only banks, the proportion of home loans has increased significantly over the last year.”
A panoramic view of K Bank headquarters. /Provided by K Bank
—Customers are likely to be concerned about making mortgage payments without face-to-face.
“Some people feel anxious about receiving large sums of money without being face to face. However, there were no accidents at Adam University, such as false listings or double contracts. This is because contracts are handled 100% in-house rather than outsourced. The delinquency rate at Adam University is less than 0.05%. It was difficult at first because it didn’t have its own process, but by developing it in-house without outsourcing, it was able to improve stability by taking advantage of K-Bank’s unique features. The reason we still only deal in flats is stability. “Currently, other commercial banks handle villas and multi-family homes through a real-time price measurement system, but they only handle flats because they believe that the appropriate price measurement has not been complete again.”
—Recently, the financial authorities put the brakes on internet-only bank mortgage loans. What are the plans for Judamdae’s future growth?
“K Bank intends to grow Adam University provided the total household debt does not increase. To achieve this, we will need to focus on refinancing loans. The Financial Services Commission has decided to expand the ‘one stop refinance loan service’, which compares and exchanges loans online, such as on smartphones, to home loans and jeonse starting from the end of this year or a month January next year. If the one-stop refinancing loan is expanded to include home loans, the balance of bank loans worth hundreds of trillions of won money will be subject to a possible transfer. In the case of K Bank, we intend to continue growth in mortgage lending by strengthening the competitiveness of interest rates and increasing the number of refinancing borrowers.”
☞ Manager Seonggyun Kim
▲Bachelor Degree in Economics, Sogang University ▲SBI Savings Bank Soho Sales Department (2016) ▲K Bank Housing Finance Camp (2020~)
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