Late entrant Toss Bank leverages advanced tech to disrupt and lead

Toss Bank aims to redefine the banking experience for South Korean consumers with cutting-edge technology and customer-centric product and services, according to CEO Hong Min-taek.

By 2023, this late entrant to South Korea's digital banking sector had emerged as a frontrunner in leveraging technology to enhance customer experience and streamline operations.

Hong emphasised Toss Bank's commitment to customer empowerment through services such as daily interest payments on deposits instead of the typical monthly interest payments. He explained that this offers financial benefits and also enriches the user experience, a factor that larger, more traditional banks struggle to replicate using older infrastructure.

Despite the modest financial difference between daily and monthly compounded interest rates, Hong highlights the greater significance of user experience and satisfaction. Toss Bank's ability to offer such services stems from its advanced digital infrastructure that larger banks cannot easily emulate.

Toss Bank has taken a proactive approach in loan services, highlighted Hong, particularly in unsecured loans, which has seen substantial growth, outpacing traditional banks. Hong attributes this success to Toss Bank's  customer engagement strategy and efficient processes, which include offering loan limit management services to subscribers. South Korean banking regulations prohibit banks from pre-screening or assessing customers’ credit worthiness without their prior consent or subscription to such a service.

The bank's 18-month journey to profitability since its launch in 2021 highlights its cost efficiency and lower cost-income ratio as compared to traditional banks. The bank's lean operation, with fewer employees and no physical branches, contributes to this efficiency.

Hong also pointed out that the bank's technological capability is further evident in its internal credit scoring model. With the largest user base among its peers and the consent to use customer data, the bank's AI-driven model providies a more accurate and holistic view of a customer's financial health. The bank may integrate financial advisory services into its open banking offerings.

Meet Toss Bank and watch Hong Min-taek speak at The Banking Academy Seoul AI Innovation Study Tour and Digital Banking Annual Meeting, 5 to 7 March 2024, Seoul, South Korea.