TL;DR:

Korea's three internet banks — Kakao Bank, Toss Bank, and K Bank — now collectively serve 50+ million accounts in a country of 51 million people. Toss Group hit ₩1.24T revenue in H1 2025 (+35% YoY) and is eyeing a $10B+ IPO. Meanwhile, the CBDC pilot flopped, stablecoin regulation just passed, and MyData APIs are enabling AI-powered financial advisors that make legacy banks look like fax machines. This is the inside story of Korea's race to become the world's first truly cashless society.

Korea Has More Digital Bank Accounts Than Citizens. Let That Sink In.

Internet bank accounts:         50M+ (in a 51M country)
Toss Group H1 2025 revenue:     ₩1.24T ($930M, +35% YoY)
Toss Bank NIM:                  2.57% (highest among 3)
Kakao Bank net profit:          ₩375.1B cumulative
Korea cash transaction share:   ~17% (down from 26% in 2020)
Toss IPO target valuation:      $10B+
MyData license holders:         60+

Let me give you the numbers that matter. As of 2025, Korea's three internet-only banks—Kakao Bank, Toss Bank, and K Bank—all posted record-breaking profits for the year. We're talking about institutions that didn't exist a decade ago now collectively serving over 50 million accounts in a country of 51 million people.

Think about that. More accounts than citizens. Every Korean who can spell "app" probably has at least one digital bank account, and many have three.

Here's what caught my eye: Toss Group's first-half 2025 revenue hit ₩1.24 trillion (roughly $930 million USD), up 35% year-over-year. Operating profit? ₩154.6 billion. Net profit? ₩105.7 billion. For a company that started as a simple money-transfer app in 2013, this is the kind of growth that makes Sand Hill Road venture capitalists weep with envy.

Toss Bank specifically posted ₩88.4 billion in cumulative net profit through Q3 2025, with a Net Interest Margin (NIM) of 2.57%—the highest among Korea's three internet banks. Meanwhile, Kakao Bank, the OG of Korean digital banking, recorded ₩375.1 billion in cumulative net profit, though Q3 saw a 10.3% YoY decline as they pivoted from growth to profitability optimization.

The Financial Services Commission is now considering licenses for a fourth internet-only bank. Translation: the existing three are printing so much money that regulators think there's room for more disruption.

Toss: The Super App That Ate Korean Finance

If you're not Korean, you might think of Toss as "just another fintech." That would be like calling Amazon "just another bookstore" in 1998.

Toss started with a single insight: Korean bank transfers were needlessly complicated. In 2013, sending money to a friend required memorizing their account number, navigating clunky banking apps, and often paying fees. Toss eliminated all of that. Phone number? Done. Money sent.

By 2026, Toss has evolved into what Silicon Valley calls a "super app"—one platform for banking, investing, insurance, payments, and soon, mortgages. The Toss app has over 23 million monthly active users in a country where Seoul's metropolitan population is 25 million.

The Toss Ecosystem

Let me break down what "super app" actually means in practice:

Toss Bank - Full-service digital bank. No branches. No paperwork. Open an account in 3 minutes from your couch. They're planning to enter the mortgage market in 2026, which is significant because mortgages represent the last bastion of traditional banking in Korea.

Toss Securities - Mobile trading platform that's been stealing market share from legacy brokerages at an alarming rate. Clean UI, zero commissions on stocks, fractional shares—everything Robinhood promised but actually delivered.

Toss Pay - QR code payments that work everywhere from street food stalls to department stores. Competing directly with Kakao Pay for dominance of Korea's offline payment infrastructure.

Toss Insurance - Micro-insurance products embedded directly into the app. Think "insure this food delivery for 500 won" or "1-month travel insurance for Southeast Asia trip." They're also building embedded insurance partnerships with mobility and e-commerce platforms, so you might buy insurance without even realizing you're in an insurance flow.

International Expansion - Toss has publicly stated ambitions to become a global fintech player, with Southeast Asia as the beachhead market. Given Korea's 51-million population ceiling, going global isn't optional—it's existential.

Why Toss Works

The secret sauce isn't just technology—though their UX/UI is genuinely excellent. It's data-driven credit scoring that uses non-traditional signals to assess creditworthiness.

Traditional Korean banks rely heavily on NICE and KCB credit scores, which punish anyone without a long credit history—young people, freelancers, recent immigrants. Toss built alternative models using transaction data, app behavior, and financial patterns to extend credit to thin-file borrowers who'd otherwise be shut out of the system.

This isn't altruism. It's good business. Millennials and Gen Z are more loyal to brands that give them their first loan than to the bank their parents use.

Kakao Bank: The Empire Strikes Back

If Toss is the scrappy challenger, Kakao Bank is the incumbent disruptor—a strange position to occupy, but here we are.

Kakao Bank launched in 2017 as Korea's first internet-only bank, leveraging the Kakao ecosystem's 50+ million KakaoTalk users. By 2025, they serve over 24 million customers and posted ₩375.1 billion in cumulative net profit through Q3.

But there's a plot twist: Q3 2025 net profit was down 10.3% YoY. Why? Because Kakao Bank is deliberately shifting from growth mode to profitability mode.

The Pivot to Non-Interest Income

Here's what's happening behind the scenes. Kakao Bank's early growth was fueled by aggressive lending—personal loans, mortgage loans, anything to build deposit base and scale. But Net Interest Margin (NIM) is capped by Korea's regulatory environment and intense competition.

So in 2025-2026, they're doubling down on non-interest revenue streams:

• Platform fees - Charging fintechs and third-party financial product providers for access to Kakao Bank's customer base
• Product sales commissions - Insurance, investment products, wealth management services
• Business loans - Moving upstream from retail into SOHO (small office/home office) and SME lending
• Kakao ecosystem synergy - Deep integration with KakaoTalk, Kakao Pay, Kakao Mobility to cross-sell financial services within Korea's most-used apps

The Stablecoin Play

In December 2025, Kakao Group announced plans to build a Korean won stablecoin ecosystem. This is massive.

The vision: a digital wallet integrating Kakao Pay, Kakao Bank, and KakaoTalk, where users can hold, send, and spend won-denominated stablecoins for everyday transactions—cross-border remittances, merchant payments, peer-to-peer transfers—all settled instantly on blockchain rails.

Why does this matter? Because Korea's central bank cancelled its CBDC pilot in Q2 2025 (more on this below), leaving a power vacuum. Kakao is positioning its stablecoin as the private sector alternative to CBDC—the future of digital money, but without government control.

If Kakao succeeds, they'll have built a parallel financial system living inside Korea's most popular messaging app. That's not fintech. That's systemic.

Open Banking: The Infrastructure Revolution Nobody Talks About

Before we go further, you need to understand Korea's secret weapon: Open Banking.

In December 2019, the Korea Financial Telecommunications & Clearings Institute (KFTC) launched a centralized Open Banking platform—a government-led initiative forcing all banks to expose standardized APIs for account inquiry and money transfer.

This is different from how it works in the West. The UK and EU use PSD2 regulations to force banks to open up, but it's still decentralized—each bank has its own API. Korea went full centralized infrastructure: one platform, one set of APIs, every bank plugs in.

The Results

• 18 banks + 100+ fintechs connected
• Tens of millions of API calls daily
• Any fintech can initiate transfers from any bank account (with user permission)

This is why Toss and Kakao could scale so fast. They didn't need to negotiate bilateral deals with 18 banks. They integrated once with the KFTC platform and instantly had access to every bank in Korea.

Open Banking 2.0: MyPayment and Embedded Finance

The next phase, rolling out in 2026, is called MyPayment—a system that lets fintechs initiate payments directly without going through traditional banks. Currently, if you pay a merchant via Toss, the money moves through banking rails. MyPayment lets fintechs bypass that entirely, settling transactions on the Open Banking layer.

This terrifies traditional banks. It turns them into pure deposit-takers while fintechs capture all the transaction flow and user relationships.

The second frontier is embedded finance—integrating financial services (payments, loans, insurance) directly into non-financial platforms. Imagine buying groceries on Coupang (Korea's Amazon) and getting instant financing approval from Toss without ever leaving the Coupang app. That's the vision.

Challenges:

• Fee disputes - Banks want higher interchange fees; fintechs want lower
• Security - API-based systems are vulnerable to hacking and fraud
• Market concentration - Kakao and Toss are becoming so dominant that smaller fintechs get squeezed out

The CBDC That Wasn't: From Digital Won to Stablecoins

Here's a story about how failure can reveal hidden truths.

Korea's central bank (Bank of Korea) ran a CBDC pilot from 2021-2024, testing distributed ledger technology for a "Digital Won" across multiple provinces (Jeju, Busan, etc.). In Q2 2025, they quietly shut it down.

Why CBDC Failed in Korea

The official line? "Infrastructure costs outweigh benefits." The real reasons are more interesting:

1. High infrastructure costs - Building an entirely new payment system when Korea already has world-class digital payment infrastructure (credit cards, Kakao Pay, Toss) felt redundant

2. Bank resistance - Commercial banks feared CBDC would cause deposit flight (why keep money in a bank when you can hold central bank money directly?), and they lobbied hard against it

3. Revenue cannibalization - Banks make money from payment fees. CBDC would reduce those fees to near-zero

4. Timing - Most major economies (including the US, EU, and Japan) have delayed or scaled back CBDC plans. Korea didn't want to go first alone

5. Private sector success - With Kakao Pay, Toss Pay, Samsung Pay, and credit cards working flawlessly, the "problem" CBDC was supposed to solve didn't feel urgent to ordinary Koreans

The Stablecoin Pivot

Nature abhors a vacuum. When CBDC died, private stablecoins rushed in.

As I mentioned earlier, Kakao announced plans for a won stablecoin in December 2025. But they're not alone. Toss is exploring digital asset services. Major banks (Shinhan, Hana, KB) are forming stablecoin task forces.

The key policy debate is: Should stablecoin issuance be restricted to banks, or should fintechs be allowed too?

• Banks' position: Only regulated deposit-taking institutions should issue stablecoins (to prevent deposit flight from banks to fintech-issued tokens)
• Fintechs' position: Innovation requires open competition; restricting issuance to banks recreates the old oligopoly

In 2025, Korea passed the Digital Asset Basic Act, establishing a regulatory framework for stablecoins. By mid-2026, we'll likely see the first licensed won-stablecoin issuers. If Kakao gets a license, their 50+ million KakaoTalk users could onboard to crypto faster than any project in history.

MyData: Your Financial Identity, Unified

While CBDC failed, another Korean fintech experiment is quietly succeeding: MyData (officially: Credit Information Management Service).

Launched in January 2022, MyData lets individuals aggregate all their financial data (bank accounts, credit cards, insurance, securities, loans, pensions) in one place and share it with services they choose.

Think of it as GDPR's right to data portability, but actually implemented and working.

The Stats

• 60+ licensed MyData providers
• Tens of millions of users (most major fintech apps support it)
• Data sources: Banks, credit card companies, insurers, brokerages, telecom providers, government agencies

Use Cases

Unified asset dashboard - See all your financial accounts in one app (Toss, Kakao, or specialized MyData apps like Banksalad)

AI-powered financial advice - Algorithms analyze your spending, saving, and investing patterns to suggest optimizations. "You're paying 4.5% on Credit Card A but only using points on Card B—switch."

Personalized product recommendations - Banks and fintechs use your data to offer loans, insurance, and investment products tailored to your actual financial situation (not generic marketing)

Credit score improvement - Real-time monitoring of credit scores with actionable advice on how to improve them

Embedded insurance - If your MyData shows frequent overseas travel, apps auto-recommend travel insurance

MyData 2.0: Beyond Finance

The next phase (2026-2028) expands MyData to non-financial sectors:

• Healthcare - Medical records, prescriptions, fitness data
• Education - Academic transcripts, certifications, online learning history
• Energy - Electricity and gas usage patterns (for green finance products)

The vision is that AI personal financial assistants trained on MyData will handle routine financial decisions for you—paying bills, rebalancing portfolios, negotiating insurance renewals.

Challenges

• Data quality - Different institutions use different formats and update schedules, causing integration headaches
• Security - Centralized personal data is a honeypot for hackers
• Consumer fatigue - Consent flows are clunky; users suffer "consent fatigue" and just click "yes" without reading
• Business model uncertainty - Many MyData providers haven't figured out how to make money yet (data access is often free to consumers)

What's Next: 2026-2028 Predictions

Let me put on my forecaster hat (it's a silly hat, but I wear it with confidence).

1. Internet Bank #4 Launches

The Financial Services Commission is reviewing applications. My prediction: License granted by late 2026, bank operational by 2027. The question is who gets it. My money's on a consortium led by either a telecom giant (SK Telecom, KT) or a tech conglomerate (Naver, Coupang).

2. Stablecoin Market Takes Off

By late 2026, we'll see the first licensed won-stablecoin in circulation. Kakao has pole position, but Toss and traditional banks will compete. The killer app? Cross-border remittances for Korea's 2+ million foreign workers sending money home.

3. Toss IPO

Toss has been teasing an IPO since 2021. I predict they finally pull the trigger in 2026 or early 2027, targeting a valuation north of $10 billion. This will be Korea's biggest fintech IPO and a test of whether global investors buy the "super app" narrative.

4. AI Financial Advisors Go Mainstream

Every major fintech will launch generative AI assistants trained on MyData by end-2026. Imagine: "Hey Toss, should I refinance my mortgage?" and getting a personalized answer in seconds. Or: "Kakao, I need ₩10 million for a car. What are my best options?"

5. Embedded Finance Everywhere

By 2028, you won't "go" to a bank. Financial services will be invisible layers inside the apps you already use:

• E-commerce checkout with instant financing (Coupang, SSG.com)
• Mobility payments with auto-insurance (Kakao T, Tada)
• Healthcare payments with medical microloans (Kakao Healthcare)

The Uncomfortable Truth: Korea's Fintech Success Is Built on Oligopoly

Here's where I put on my critical thinking hat.

Yes, Toss and Kakao are impressive. Yes, Korea's digital banking infrastructure is world-class. But there's a darker pattern emerging: market concentration.

Two companies—Kakao and Toss—control the majority of Korea's digital payments, banking, and soon, stablecoin infrastructure. That's not "disruption." That's replacing one oligopoly with another.

Korean commercial banks were criticized for decades as stodgy, fee-hungry oligopolies protected by regulation. Now we have two fintech giants with 50+ million users each, vertical integration across banking-payments-insurance-securities, and network effects so strong that new entrants can't compete.

Small and mid-sized fintechs are getting squeezed. Open Banking and MyData were supposed to level the playing field, but they've mostly benefited the platforms with existing scale.

What This Means for Consumers

Short term: Great deals, excellent UX, fierce competition between Toss and Kakao means lower fees and better service.

Long term: If one of them wins decisively, we're back to monopoly pricing. And unlike banks, which are heavily regulated, fintechs have more flexibility to extract value once they dominate.

Korea's regulators will need to walk a tightrope—encouraging innovation without letting two companies control the entire financial system.

Global Implications: Korea as a Fintech Laboratory

Why should you care about Korean fintech if you're not Korean?

Because Korea is the pilot for the future of money everywhere.

• Super apps - Toss and Kakao are proving the model works. Expect Western fintechs (PayPal, Block, Revolut) to copy it
• Stablecoins > CBDC - If Korea's stablecoin experiment succeeds where CBDC failed, other countries will follow the private-sector path
• Open Banking infrastructure - Korea's centralized model is more efficient than the EU's fragmented approach. Emerging markets will study it
• MyData + AI - The combination of data portability and generative AI could redefine personal finance globally

Conclusion: The Battle for 50 Million Wallets

Korea's fintech revolution isn't really about technology. It's about who controls the financial infrastructure of 50 million hyperconnected consumers.

Traditional banks had a century-long monopoly. Kakao and Toss broke it in under a decade. Now the question is whether they'll build something better—or just replace the old gatekeepers with new ones.

The next 2-3 years will decide the endgame:

• Will stablecoins displace bank deposits?
• Will Toss or Kakao win the super app war?
• Can regulators prevent monopoly without killing innovation?
• Will Korean fintechs succeed globally, or remain trapped in a 51-million-person market?

I'll be watching. Because whatever happens in Seoul will echo across Tokyo, Singapore, Jakarta, and eventually San Francisco.

The future of money is being written in Korean. Better start learning the language.

This post is part of the "Korea's AI Playbook" series, where I explore how a country of 51 million people became a laboratory for humanity's digital future. Next up: K-pop's AI controversy—when virtual idols outsell real humans.

All data sourced from company filings, Korean financial press (Toss Feed, Biz Korea, Opinion News), and my own analysis of publicly available information as of February 2026.