Kakao Bank said Thursday it has signed a memorandum of understanding with MCS Group, marking a key step in its entry into the Mongolian financial market and global expansion.

The agreement, signed at Kakao Bank’s Pangyo headquarters on April 3, outlines cooperation in strategic investment in M Bank, joint development of alternative credit-scoring models, advisory support on products and user experience, and potential joint ventures in Central Asia. M Bank, launched by MCS Group in 2022, is Mongolia’s only fully digital bank.

The partnership builds on Kakao Bank’s expansion in Southeast Asia, including Indonesia and Thailand, as it looks to extend its footprint into Central Asia. The lender plans to deploy its proprietary Kakao Bank Score system and risk management capabilities, which have supported more than 15 trillion won ($11 billion) in loans to underserved and thin-file borrowers.

Mongolia presents a promising but underdeveloped market for digital finance. While internet penetration is high and financial infrastructure is improving, the country’s relatively young population — with a median age of 31.5 — leaves many consumers without sufficient credit history, increasing demand for alternative scoring models.

By partnering with MCS Group, which operates across sectors including telecommunications, energy, finance and retail, Kakao Bank aims to localize its technology and accelerate financial innovation.

“Applying our digital banking technology and risk management capabilities in Mongolia will help expand financial access and foster innovation,” said CEO Yun Ho-young. “This will also serve as a stepping stone for expansion into Central Asia.”

MCS Holdings co-CEO Myagmarjav Ganbyamba said Kakao Bank’s expertise would help advance Mongolia’s financial ecosystem and deepen bilateral cooperation.

By Choi Yeon-jae (ch0221@heraldcorp.com)