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Toss Bank and Kwangju Bank File Trademark for 'Hamkke Loan', Will It Spark 'Innovation'?

[비즈한국] Since its launch in 2020, Toss Bank has acted as a "catfish" in the financial market, continuing to release unconventional products this year, such as a foreign currency account with no exchange fees. Toss Bank was granted approval for an innovative financial service by financial authorities in June to prepare a "joint loan" product with Kwangju Bank192530, and it has been confirmed that they also filed for a trademark prior to this approval. While the collaboration between an internet-only bank and a regional bank is attracting attention, some suggest it remains to be seen whether the new product will truly be an "innovation" for consumers.

The joint loan product being developed by Toss Bank and Kwangju Bank is expected to be released under the name "Hamkke Loan" (Together Loan). According to KIPRIS, the patent information search service of the Korean Intellectual Property Office, Toss Bank filed for the trademarks "Hamkke Loan," "Tobank Hamkke Loan," and "Toss Bank Hamkke Loan" on June 17. All three trademarks were filed under Class 36, which covers finance, currency, and banking (Nice 12th Edition). Designated goods and services include financial services, mortgage lending, consumer finance lending, and loan financial consulting. June 17, the day the trademarks were registered, was also the day applications opened for the first round of 2024 innovative financial services. While Toss Bank stated that nothing is finalized, they added, "We filed in advance to secure the trademark rights."

The Toss Bank-Kwangju Bank joint loan is a personal loan product where, if a consumer applies for a loan on the Toss Bank app, both banks conduct their own independent credit assessments and jointly determine the loan limit and interest rate. The two banks share the loan amount according to an agreed-upon ratio, while Toss Bank handles overall services such as principal and interest collection, certificate issuance, and customer inquiries.

The joint loan service was designated as an innovative financial service on June 26. This was made possible by granting special regulatory sandbox exemptions that allow banks to outsource tasks such as loan screening and execution, customer information verification, and collection of overdue payments to each other without additional reporting or permits. The Financial Services Commission (FSC) expressed its expectation that the effects of the joint loan would "allow banks to reduce loan acquisition costs, such as marketing expenses, and diversify borrower risk, thereby providing lower interest rates to consumers."

Toss Bank and Kwangju Bank are developing the product with a goal of launching it in the third quarter. On July 5, the two companies accelerated their preparations by signing a Memorandum of Understanding (MOU) to cooperate on product development and operations, as well as consumer protection, marketing, external communication, and post-launch follow-up tasks.

This joint loan is noteworthy as it involves the outsourcing of services between Tier 1 financial institutions, rather than between savings banks or lending companies. Under the Financial Consumer Protection Act, Toss Bank and Kwangju Bank act as both direct sellers and sales agents/brokers for each other's loan products.

Both companies emphasize that the joint loan is a "product that provides benefits to customers" by leveraging their respective strengths. Toss Bank highlights its user-friendly mobile experience and digital customer acquisition power, while Kwangju Bank touts its expertise in credit loan handling and risk management based on its long history.

Meanwhile, some are questioning whether the joint loan product is truly an "innovation" for consumers. Since the interest rate and limit are determined based on both companies' credit evaluation systems, it is unclear how much of an interest rate benefit there will be compared to existing market products. One Toss Bank user asked, "Wouldn't it be more advantageous to compare the loan products held by both banks and find the one with the lowest interest rate?"

Regarding the interest rate level, a Toss Bank official replied, "It is difficult to set interest rates as a single figure because they reflect various factors such as an individual's credit and income. However, there is room for interest rates to be lowered through the refinement of credit evaluation models and the reduction of marketing costs."

Concerns have also been raised that since the joint loan is a product that executes two loans simultaneously, it could lower consumers' credit scores or increase the risk of delinquency. The FSC, concerned about this, included as a condition for the innovative financial service that "the banks must clearly inform the consumer before loan execution about the potential short- and long-term negative impacts on credit evaluation that may occur when executing such a loan, given that they are entering into loan agreements with two banks."

In response, Toss Bank explained, "While it is true that loans are executed from two banks at once due to the product structure, since both are Tier 1 financial institutions, there will likely be no significant impact on the consumer's credit rating. We expect benefits such as interest rate advantages. We plan to share information with consumers as transparently as possible and ensure their choices are not restricted."

Both companies have also prepared measures to prevent a drop in credit scores. The company emphasized, "We will cooperate with credit evaluation agencies to separately accumulate data related to joint loans, and through continuous consultation, we will strive to ensure that the impact of joint loans on individual credit scores is properly reflected."

Meanwhile, Toss Bank continues to play its role as a "catfish" in the financial market this year. In January, it launched a foreign currency account that offers a 100% preferential exchange rate without any conditions. The product, which has no exchange fees for transactions in 17 currencies, reached 1 million accounts in just 105 days, sparking a craze for foreign currency services in the financial sector. In May, it drew attention by introducing the "Challenge Account," which rewards users with prize money via a lottery if they wake up early and verify their activity.