The Korea Federation of Savings Banks said on Tuesday that 20 savings banks, including Acuon, have been additionally designated for the Financial Services Commission’s online investment-linked innovative finance service and plan to launch the service within the first quarter of this year.

Online investment-linked investments by savings banks are a newly introduced financial service. In July 2024, 29 savings banks including OK were designated by the Financial Services Commission for an innovative finance service that allows savings banks to make linked investments, under the Online Investment-Linked Finance Act, in personal credit loan borrowers recruited and screened by online investment firms.

After a preparation period including systems development, the service was first launched in May last year. As of recently, 12 savings banks have supplied about 160 billion won through six online investment firms.

Savings banks’ online investment-linked investments are being assessed as a better fit for savings banks as lenders for ordinary people. Most of the supply, more than 95 percent, goes to borrowers in the bottom 50 percent of personal credit scores and is provided as mid-interest loans at around 12 percent.

The model is drawing attention as a sustainable collaboration that supplies mid-interest-rate funds to ordinary people with mid-to-low credit. It is based on online investment firms’ digital and AI credit evaluation technology and savings banks’ know-how in providing finance to ordinary people.

Another factor behind 20 additional savings banks joining the second designation application for the innovative finance service is that delinquency management for savings banks’ online investment-linked investments is being handled in a stable manner.

About 6 months after the service was first introduced, the delinquency rate stood at 0.6 percent as of end-December last year. It is being managed stably, even considering the service is still in its early stage.

The Korea Federation of Savings Banks plans to seek ways to broaden collaboration between savings banks and online investment firms to expand the supply of mid-interest-rate credit loans for ordinary people.

With the additional designation of the innovative finance service, 49 of the 79 savings banks will be able to handle online investment-linked investments. The federation expects the scale of funding supplied through the service to expand further.

As online investment firms’ credit evaluation technology has been verified to a significant extent, the federation also plans to actively review ways to cooperate with online investment firms when small and mid-sized savings banks build credit scoring systems (CSS) in the future.

Oh Hwa-kyung (오화경), chairman of the Korea Federation of Savings Banks, said he highly values savings banks’ efforts to improve financial access for ordinary people and supply needed funds by working with online investment firms despite a challenging business environment. He said the additional designation for the innovative finance service is meaningful as more savings banks have shown interest and participated. Oh said the federation will provide more meticulous support so that savings banks’ online investment-linked investment service can grow in a stable manner.