Joint lending between internet-only banks and regional banks is expanding beyond personal credit loans to corporate finance. Banks plan to jointly handle corporate loans, where screening and post-loan management are more complex than in personal lending, widening the scope and roles of interbank cooperation. With financial authorities moving to ease related regulations, attention is on whether a new credit supply model combining internet banks' non-face-to-face strengths and regional banks' corporate lending know-how will take hold.

In the financial sector, the Financial Services Commission on Oct. 7 newly designated a joint corporate loan service applied for by Toss Bank and Gwangju Bank as an innovative financial service. It is the second case of cooperation in corporate finance after a joint loan for small and medium-sized firms and small business owners by KakaoBank and Busan Bank was designated in July.

The joint corporate loan being pursued by Toss Bank and Gwangju Bank allows customers to apply through Toss Bank's non-face-to-face channel. The two banks then conduct separate screenings and jointly determine loan limits and interest rates. The loan amount will be split 50 to 50 between the two banks.

The service is designed so that a significant portion of corporate credit and secured loans, previously centered on branch visits and in-person consultations, can be handled non-face-to-face. Most documents needed for corporate credit screening will be collected automatically, and both banks' credit scoring models will be used to calculate loan limits and interest rates.

Toss Bank expects this will reduce the burden on corporate customers of preparing documents and visiting a bank. It also expects to expand loan opportunities to small and medium-sized companies that a single bank previously found difficult to serve on its own.

The previously designated joint corporate loan by KakaoBank and Busan Bank also combines regional banks' corporate loan screening capabilities with internet-only banks' digital infrastructure. It is being pursued with the aim of improving financial access for local small and medium-sized firms and small business owners and lowering interest burdens, with a target of launching the product in 2027.

JOINT LOANS THAT STARTED WITH PERSONAL CREDIT LOANS SPREAD TO THREE INTERNET BANKS

Joint lending between internet-only banks and regional banks was first introduced in 2024 by Toss Bank and Gwangju Bank. After being designated an innovative financial service in June that year, the two banks launched a personal credit loan product called "Hamkke Loan" in August.

"Hamkke Loan" allows customers to apply through the Toss Bank app. The two banks then separately screen the borrower and jointly decide limits and rates, while splitting the loan amount equally. It combines the internet-only bank's non-face-to-face platform with the regional bank's credit screening capabilities.

Loan supply also expanded. Toss Bank said that as of May 23 last year, the cumulative amount supplied through Hamkke Loan exceeded 1 trillion won. It reached the milestone about 9 months after launch, with cumulative execution cases totaling about 32,000.

The joint loan model later spread to other internet-only banks. KakaoBank and Jeonbuk Bank launched a personal credit loan product called "Gati Loan" in December after being designated an innovative financial service in April last year. It provides loans of up to 200 million won for wage earners, with the two banks separately screening borrowers and splitting the loan amount equally.

K Bank and Busan Bank were also designated an innovative financial service in July last year and launched a joint loan service on Nov. 26 the same year. Applications, contracting, disbursement and repayment can be handled through the K Bank app, and the two banks separately conduct screenings before splitting the loan amount 50 to 50.

As a result, joint handling of personal credit loans by internet-only banks and regional banks has expanded to three bank pairings: Toss Bank and Gwangju Bank, KakaoBank and Jeonbuk Bank, and K Bank and Busan Bank.

As cooperation that began with personal credit loans expands into corporate finance, changes are expected in how joint loans are operated. Corporate joint loans have existed in the traditional financial sector, but this time a key feature is linking the process from application to screening and funding by combining internet-only banks' non-face-to-face platforms with regional banks' corporate loan screening capabilities.

FINANCIAL AUTHORITIES REVISE RULES ON IN-PERSON WORK TO BOOST REGIONAL FINANCE

The expansion of joint corporate loans also aligns with financial authorities' policy to promote regional finance.

The commission in July announced operating plans for joint loans by regional banks and internet-only banks to small and medium-sized firms and sole proprietors at a regional finance meeting. The plan is to improve financial access for local companies by combining regional banks' corporate screening capabilities with internet-only banks' lower funding costs and non-face-to-face infrastructure.

The commission at the time focused on internet-only banks having funding costs on average about 0.30 percentage points lower than regional banks. It presented a goal of supplying loans at interest rates at least 0.30 percentage points lower than existing regional bank loan products by using that advantage.

Another policy rationale is that internet-only banks can build experience and screening capabilities in handling loans to small and medium-sized firms through cooperation with regional banks, while regional banks can use internet-only banks' platforms to expand non-face-to-face customer contact points.

Financial authorities are also pursuing deregulation to support the expansion of corporate lending. After the commission in July approved a plan to adjust the scope of in-person work allowed for internet-only banks, it on Sept. 30 announced a revision bill to the "Regulations on Supervision of Banking Business" containing related details.

Internet-only banks are in principle required to conduct banking on a non-face-to-face basis, but corporate lending can require in-person work in cases such as verifying original documents, checking the purpose of fund use and confirming the status of collateral.

The revision bill includes provisions allowing in-person work needed to verify original documents to check for forgery or alteration of documents submitted non-face-to-face, to check the appropriateness of fund use and collateral value, and for the management of delinquent loans and debt restructuring consultations.

The commission plans to collect opinions through Nov. 9 and then, following related procedures, approve the revision. The deregulation is intended to allow unavoidable in-person work by internet-only banks and is expected to provide an institutional foundation for expanding joint corporate loans with regional banks.

EXPECTATIONS FOR EXPANDING NON-FACE-TO-FACE CORPORATE FINANCE; JOINT SCREENING AND BAD-LOAN MANAGEMENT ARE KEY

Joint corporate loans are drawing expectations because combining internet-only banks' non-face-to-face channels with regional banks' corporate loan screening capabilities can improve convenience and expand funding. As the two banks share funding burdens, it is also expected to spread credit exposure for each bank.

Still, it remains to be seen how much such cooperation can actually reduce borrowers' interest burdens and broaden loan opportunities. The minimum 0.30 percentage-point interest rate cut presented by financial authorities is a policy goal, and actual loan rates may vary depending on a company's creditworthiness, financial condition and collateral terms.

Soundness management specific to corporate lending is also an important task. Personal credit loans are screened mainly on relatively standardised information such as income and credit scores, but corporate loans require a comprehensive evaluation of financial condition, cash flow and business outlook, as well as non-quantitative information such as interviews with management and on-site inspections.

Because joint loans divide screening and funding between two different banks, it is important how they will coordinate if their screening criteria differ and how they will split bond management and recovery work if delinquencies occur. For corporate credit, it is also necessary to continuously check fund usage, business conditions and collateral values even after disbursement.

There is also a need to examine the impact of joint loans on revitalising regional finance. Because the structure uses internet-only banks' nationwide customer acquisition networks, how much funding actually reaches small and medium-sized firms and small business owners outside the capital region could be a benchmark for gauging policy effects.

As joint loans that began with personal credit expand into corporate finance, interest rate competitiveness of future products, soundness indicators, and funding supply results to regional companies are expected to be key criteria for judging the performance of the interbank cooperation model.

A Toss Bank official said joint corporate loans are "a meaningful innovative product" that helps small and medium-sized business customers conveniently secure needed funds by having the two banks screen together and share the funding burden. The official said the bank will work closely with relevant institutions to offer corporate customers a new corporate loan experience.