With more than 1,400 branches and 10,000 ATMs throughout South Korea, KB Kookmin Bank (KB) is one of the largest commercial banks in South Korea. Their most recent investor’s report shows that KB had total assets of 290,277.9 billion won, and annual profits of 1,107.2 billion won as of December 31, 2015.
Late last year the bank’s parent company, KB Financial Group Inc (KBFG), invested 1.5 billion won (US$1.3 million) in Coinplug, through another of its subsidiaries, KB Investment.
While KBFG is the fourth largest financial group in Korea, based on total asset value, KB generates 67% of the group's profits, and holds more than 80% of the group’s assets - 329.1 trillion won.
As the largest subsidiary of KBFG, the bank claims to have the most extensive branch and mobile banking network, and the largest customer base in Korea. KB also boasts the biggest market share in deposits, loans, trusts, custody, and smart banking. In 2014, the bank reported having 29.1 million customers, which is more than half of the South Korean population of 50.24 million.
“With a customer base that includes over half of the entire Korean population, KB Kookmin Bank has a brand image that is popular and friendly.”
KB reportedly entered into a Memorandum of Understanding with Coinplug recently, focused on developing a new foreign-exchange business model, based on blockchains. They are planning to develop overseas fund transfer and data storage services, for the verification of online bank accounts, based on distributed ledger technology.
Founded during the late 2013 bitcoin price explosion, Coinplug had an initial fundraising round of US$400,000 from Silicon Valley and Korean VCs including Tim Draper. Since then it has gone through several successive rounds including the latest, $5 million round last October, which includes an investment from KB, and takes their total funding up to $8.3 million.
Prior to KB’s investment, Coinplug was already one of the most prolific bitcoin companies in Asia, offering a bitcoin exchange, a web wallet, their own line of ATMs in Seoul, services at other ATMs - including remittances, a merchant Point of Sale service, and an innovative line of in-store bitcoin sales-by-prepaid cards called the okBitcard.
Coinplug started selling bitcoins via these cards in 2015, at 24,000 7-11 locations across Korea. Additionally, they’ve started selling bitcoins at over 7,000 traditional ATMs across the country too.
A representative from KB said that "the blockchain technology is a new trend and we are trying to adopt this technology in a low level of data integrity platform.”
“We are planning to escalate our services further to provide more secure and comfortable financial services for our customers."
- KB Kookmin Bank
Coinplug and KB have at least one competitor within the Korean remittance market, Korbit. The first bitcoin exchange in Korea recently launched a service called Hyphen, which is a new type of blockchain-enhanced, global payments platform.
Korbit already has a remittance solution to compete with KB’s blockchain remittance solution, at least for incoming remittance payments. Bitwire launched in July 2015, and Korbit claims they have already processed over US$100M through the service. Transfers in Bitwire are processed and settled in less than two hours, and at least for now, they charge no fees.
What has yet to be seen, however, is if either of Korbit’s solutions will be allowed to compete with KB’s offerings. Outbound remittance services from Korea are legally obliged to include commercial banks.
“Under the Foreign Exchange Transactions Act, only authorized financial institutions such as commercial banks, post offices, and international MTOs (e.g., Western Union, MoneyGram, PayPal) are allowed to offer outbound remittance services in the Republic of Korea. Commercial banks and post offices can provide the service directly, while MTOs can remit funds through agents such as banks.”
- International Labour Organization