Kakao Bank System Error, Toss Bank FX Glitch Add to 163 Failures at Korea’s Digital Banks in Five Years
South Korea’s internet-only banks are facing increased scrutiny due to a series of system failures impacting customers. This raises concerns about the operational risks at these digital lenders, especially as average salaries within the sector continue to climb.
In 2025, all three internet-only banks reported average annual compensation exceeding 100 million won ($66,700), according to data disclosed by the Korea Federation of Banks and the banks themselves.
The latest incident involved Kakao Bank, whose mobile application experienced a crash on Tuesday afternoon, according to a report submitted to and disclosed by Rep. Lee Yang-soo of the People Power Party.
Kakao Bank attributed the initial outage to a recent regulatory program update. After identifying the issue, the bank reversed the update, restoring normal access to the mobile app by 3:55 p.m., approximately 26 minutes after the disruption began.
A subsequent outage occurred around 5:30 p.m. during the bank’s internal review of the first incident, causing another eight minutes of app inaccessibility and fueling concerns about the recovery process.
In its report to Rep. Lee’s office, Kakao Bank stated that a change in the internal monitoring system’s settings was the direct cause of the initial disruption. The second delay occurred while these settings were being restored to their original state.
“The monitoring settings that had destabilized the system have been restored, and services are now operating normally,” the bank stated in its report, also indicating an ongoing investigation into the root cause of the disruption.
While the system glitches did not result in financial losses, approximately 180 customer complaints were lodged regarding failed attempts to subscribe to public offerings during the outage, and the bank is evaluating potential compensation.
This incident followed a foreign exchange error experienced by Toss Bank on March 10. Their app briefly displayed an unusually low yen exchange rate, resulting in about 50,000 transactions totaling 28.38 billion won.
Toss Bank explained that the error was caused by a malfunction in its internal system, which calculates posted exchange rates based on data from several external institutions.
These incidents have garnered increased attention as internet-only banks, operating without physical branches, deliver all financial services via mobile platforms. Even brief outages can disrupt essential transactions such as loan disbursements, transfers, and foreign exchange, causing significant inconvenience for customers and eroding trust.
Data submitted by the Financial Supervisory Service to Rep. Lee’s office reveals that South Korea’s three internet-only banks have recorded a combined 163 system failures over the past five years. Toss Bank and Kakao Bank each accounted for 64 incidents, while K Bank recorded 35.
Regarding financial impact, Toss Bank reported the most significant damage, affecting 10,700 customers with compensation totaling 48.74 million won. This figure does not include the recent yen exchange rate glitch.
These operational shortcomings contrast with rising compensation levels at these digital lenders. K Bank’s average employee pay increased by 3 million won year-over-year to 102 million won, surpassing the 100 million won mark for the first time. Kakao Bank led with an average compensation of 122 million won, followed by Toss Bank at 120 million won.
“The recent series of system failures has fueled growing anxiety among financial consumers,” stated Rep. Lee. “Financial authorities must thoroughly inspect the overall IT operations of internet-only banks and implement measures to improve the system.”
jwc
