KakaoBank said on April 9 it signed a business agreement with Mongolia's largest company, MCS Group, and is stepping up its entry into the Mongolian financial market.

At the signing ceremony held at KakaoBank's Pangyo office, the two sides agreed to cooperate across areas including a strategic equity investment in M Bank, upgrades to credit scoring models and joint development of alternative credit scoring models, advice on products and services and UX and UI, and joint entry into Central Asia. M Bank is a financial subsidiary established by MCS Group in 2022 and is Mongolia's only digital bank.

The cooperation is expected to provide an opportunity for KakaoBank to expand its business scope into Central Asia based on experience accumulated in Southeast Asian markets including Thailand and Indonesia.

KakaoBank has provided more than 15 trillion won in loans to mid to low-credit borrowers and thin-file customers based on its self-developed credit scoring model, 'KakaoBank Score,' and its risk management capabilities. Through the agreement, it plans to apply its technology and soundness management experience to the Mongolian market.

Mongolia is seen as a market with strong potential for growth in digital finance, as it has high internet penetration and is expanding financial infrastructure under a government-led drive. But demand for alternative credit scoring models is expanding because the median age is low at 31.5 and a large share of the population has limited financial histories.

KakaoBank plans to work with MCS Group, which has subsidiaries across sectors including telecommunications, finance and distribution, to build an alternative credit scoring model suited to the local environment and pursue innovation in the financial ecosystem.

KakaoBank CEO Yun Ho-young (윤호영) said, "We will combine KakaoBank's digital banking technology and risk management capabilities with local conditions in Mongolia to improve access to financial services and contribute to innovation in digital finance." He added, "This cooperation will help lay the groundwork for entry into Central Asia and we will continue to expand global partnerships."

Myagmarjav Ganbyamba (먀그마르자브 간비얌바), co-CEO of MCS Holdings, said, "We are pleased to cooperate with KakaoBank, South Korea's leading internet bank." He added, "With KakaoBank's technology and financial know-how, we will take Mongolia's financial environment to the next level and strengthen our cooperative relationship."