Seoul Searching

As traditional banks worry about stablecoins, Korea’s KakaoBank sees opportunity

Brian Moynihan, Bank of America’s long-serving Chief Executive Officer, has fair reason to feel disgruntled. Amid excitement over the future for stablecoins, he revealed earlier this month that “we have to have it.” — “We’ve not been quite sure how big it will be, but we have to be ready,” he said. Investors shrugged; the stock price barely twitched.

Over in Korea, it was a different story. KakaoBank, a digital-only bank, had been underperforming the broad KOSPI index for at least a year. But then, on June 9, the country’s newly elected president appointed a former digital asset research chief as his top economic advisor and the stock surged 20%. A couple of weeks later, it emerged that the bank had filed multiple trademark applications related to stablecoins and the stock surged again, pushing the stock up 50% over the period. “The trademark applications were filed as a preemptive move to respond to developments in the stablecoin market,” a bank official said, after the president had talked about setting up a won-based stablecoin on his campaign trail.

Sister company KakaoPay performed even more strongly. Until the Bank of Korea took some of the wind out of the pair’s sails earlier this week, it was up over 140% even after its stock was temporarily suspended due to overheating.

Since starting Net Interest five years ago, I’ve looked at financial companies all over the world – from Greece last week to India, Brazil, Russia, Japan, China and Germany in prior issues. One market we haven’t yet explored is South Korea, where, after the political coup last year, conditions have stabilized. What follows is the story of how a messaging app spawned one of Asia’s most efficient banks – and how its ambitions in digital assets might offer lessons for bankers everywhere, including Bank of America’s Brian Moynihan.