K bank and Kakao Bank interest deposit wars

K bank and Kakao Bank competitions for the first place in South Korea's online banking sector are getting hardened where they are both racing to offer higher incentives for users. K bank is the first online bank or bank without branch offices launched in April and has been under intense pressure by KakaoTalk's Kakao Bank launched at the end of July.

Tinuku K bank and Kakao Bank interest deposit wars

K bank have decided to add higher interest rate offerings to deposit products in response to good performance over the past four months to seize the number of accounts, while Kakao Bank has set a record by recording 1 million new accounts just five days after launch.

K banks said it had raised the one-year time deposit rate allowing it to deposit from 10,000 won (US$8.82) to 50 million won per account. So far, interest rates have been offered in the range of 1.8 percent to 2.0 percent, but since Wednesday's customers gained interest rates of up to 2.1 percent.

"Code K" is one of two deposit products by K bank accessed by users from their platform, while the "Plus K" code obtains a one-year deposit interest rate of 1.6 percent to 2.2 percent, depending on how many requirements the account holders have.

Kakao Bank offers a 2.1 percent interest rate to users who have three-year deposits and 2 percent for one-year time deposits. The second online bank, launched in late July, said they do not plan to raise the current deposit rate because it has since been higher than its competitors.

On Wednesday, the average interest rate of all one-year term deposits by traditional banks in South Korea is only in the range of 1.34 percent. Kakao Bank said it had had 1 trillion won in deposit and added 770 billion won from 2.03 million accounts on 13 days after its launch featuring Kakao Friends character as its design.

This Kakao Bank's achievement exceeds the number of K bank from April to July generating over 500,000 accounts where customers deposit 690 billion won and borrow 630 billion won, although many Kakao Bank customers expressed discomfort due to server problems and online traffic overload.

Kakao bank on Tuesday said it has stepped up resources to improve its services by creating a second customer service complaint center of 500 employees, in addition to the first customer center with 340 employees.