Internet-only banks lure customers with Tamagotchi-style savings accounts, digital piggy banks

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Saving money is never fun. But when combined with a digital pet that grows alongside the size of your savings, it can be more motivating.

South Korea’s three internet-only banks – KakaoBank, K bank and Toss Bank – have launched unique products such as Tamagotchi-style savings accounts, mobile joint accounts and digital piggy banks to appeal to trend-driven customers.

Toss Bank, launched in October last year, registered 3.6 million users in just eight months thanks to a host of unique savings products and digital-enabled services. One is a Tamagotchi-style savings account in which a user can watch a randomly selected digital pet – turtle, octopus, foal or ghost – grow up with deposits for six months.

The digital pet idea was met with booming demand, as Toss opened 100,000 new accounts within 72 hours of its June 14 launch. Users can deposit a maximum of 1 million won ($773) per month for a total of six months with a 3 percent return.

“Saving money takes time and patience, and we wanted to turn that time into a fun experience of raising an adorable pet for our users,” said Toss Bank CEO Hong. Min-take, to reporters at a media event in Seoul on Tuesday.

Toss Bank also plans to launch “soon”, Hong added, a joint mobile account that will cater to friends and groups looking to share the bill for their favorite activities.

KakaoBank, the No. 1 national internet-only bank by users, with 19.13 million users, has rolled out various accounts and services related to its sister company and top mobile messenger KakaoTalk. In this sense, 11.39 million users had opened one of its joint accounts in May. KakaoTalk currently has around 45 million monthly active users in a country of around 51 million.

Its 26-week short-term savings account, a rare commodity here, met with strong demand when it launched on June 21, registering 150,000 new accounts in 72 hours. The bank’s piggy bank services are also a key product, allowing users to make daily deposits of less than 1,000 won into its mobile account. The bank was managing some 4.35 million piggy bank accounts at the end of April.

K Bank is somewhat behind its two rivals in providing unique services, but it is the only mobile bank here to provide a real-name account for cryptocurrency trading. Its partnership with local crypto exchange Upbit, signed in June 2020, has helped more than triple its users from 2.19 million in 2020 to some 7 million at the end of 2021.

Bank K’s initial public offering plans, which have stalled for years, gained momentum with the company filing a preliminary review for a Korean market listing with the Korea Stock Exchange on Thursday. Its IPO is expected to be valued at at least 6 trillion won and the company is expected to debut in November, market watchers say.

Korea’s internet-only banks have grown rapidly in recent years, buoyed by an increase in smartphone usage and keeping traditional lenders on their toes with user-friendly services.

KakaoBank’s profits jumped around 80% year-on-year in 2021, with net profit standing at 204.12 billion won, according to a regulatory filing. Operating profit more than doubled over the cited period to 256.94 trillion won, and sales also rose 32.4 percent year-on-year to 1.06 trillion won.

Bank K posted a net profit of 22.4 billion won last year, falling into the black after a net loss of 105.4 billion won the previous year.

Relatively new to the market, Toss Bank has yet to report earnings. Last month, its total loans amounted to some 4 trillion won, 36% of which were taken out by low- and medium-rated customers.

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