The need to get it right first time
Creating a digital platform that could offer far greater convenience, however, would only become a reality if they could help the new bank meet all the necessary standards of compliance, resilience and security. “After proposing the initial concept, we started work on helping the regulator understand what we were trying to achieve,” says Bellens. “This helped secure a license to bank — and then we helped kakaobank through set-up: technology assessment, risk control, customer experience design and so on.”
The EY FSO Assurance and Consulting teams and kakaobank in Seoul worked closely with the EY Technology services in Hong Kong under James Lloyd, EY Asia-Pacific FinTech Leader; as well as with the Korean regulator to prove that you can leverage new technologies to actually improve know-your-customer (KYC) benchmarks.
“For instance,” says Bellens, “Traditionally, a customer would have to show up to a branch in person to open a bank account. But since 2016, Korea has accepted a selfie as part of an e-KYC initiative. This is then cross-referenced against a series of databases and criteria, and could be more secure than an in-person meeting at a bank.”
The trouble was that customers weren’t comfortable using selfies to open bank accounts and didn’t really see the benefits. EY worked with the kakaobank team to demonstrate that a different approach to e-KYC could create a much better customer experience. Using these new systems, prospective kakaobank customers can now open an account in 7 minutes, compared to the average 20-30 minutes at other banks.
The EY Assurance team also worked closely with colleagues in China, the UK and the US to better understand data privacy, cybersecurity and anti-money laundering requirements. Similarly, the EY Tax team made sure that kakaobank’s tax function would be able to address the twin demands of regulatory compliance and enabling sound reporting.
A banking business model for a digital age
“Like many of its emerging technology peers around the world, Kakao views its business from an activation first, monetization second perspective,” says Kim. For kakaobank, this created a challenge: there were differing opinions within the shareholder group on what the business model should be and when to monetize.