Combining internet bank and regional bank strengths for productive finance

[Each company]
[Each company]

Toss Bank and Gwangju Bank are set to extend their joint lending model from personal credit loans to corporate financing, combining Toss Bank's digital platform with Gwangju Bank's corporate credit assessment capabilities to target small and medium-sized enterprise borrowers.

The Financial Services Commission designated the two banks' jointly developed "corporate co-lending" product as an innovative financial service at its regular meeting Thursday, according to financial industry sources.

Under the product, a corporate customer applies for a loan through Toss Bank, and both banks conduct separate credit reviews before each disburses funds according to a pre-agreed ratio. The arrangement extends the "Hamkke Daechul" joint personal credit loan model — the first of its kind in the Korean banking industry — into corporate finance.

Corporate customers will be able to complete most of the application process for both secured and unsecured business loans through Toss Bank's digital channels. The banks plan to automate the collection of most required documents, reducing the need for branch visits and paperwork. Loan interest rates and credit limits will be determined using the credit-scoring models of both institutions.

By pooling their underwriting capabilities and sharing the loan funding, the two banks aim to spread risk and reach small and medium-sized enterprise borrowers that either institution would have struggled to serve alone. The partnership is seen as a strategy to broaden each bank's footprint in the corporate lending market by combining their respective strengths in customer reach and credit assessment experience.

Gwangju Bank aims to use the Toss Bank platform to reach corporate customers nationwide beyond its regional base, while Toss Bank plans to sharpen its corporate lending competitiveness by drawing on Gwangju Bank's business credit expertise.

"The corporate co-lending product is a meaningful innovation that allows small and medium-sized enterprise customers to secure the funding they need conveniently, with both banks jointly reviewing applications and sharing the financing," a Toss Bank official said. "Now that it has been designated an innovative financial service, we will work closely with the relevant authorities to prepare a new corporate lending experience for our business customers."

Park Dae-ha, deputy president of Gwangju Bank, said the two institutions would combine their capabilities to offer a competitive joint lending product that delivers meaningful financial support to local small business owners and small and medium-sized enterprises struggling to raise funds amid an economic slowdown and rising financing costs.


forest@heraldcorp.com