Commercial banks seek ideas from new competitors for digitization

Woori Bank CEO Kwon Kwang-seok speaks at the lender’s annual management strategy kick-off meeting held at its headquarters in central Seoul on Friday. (Woori Bank)

South Korea’s leading commercial banks are looking for ways to accelerate the digitization of their retail services, some even breaking down traditional barriers between new competitors in the industry in order to share ideas on driving innovation.

Kakao Bank CEO Yoon Ho-young was invited by Woori Bank on Friday to talk about the internet-only banking giant’s success and the future of finance, Kakao Bank said. Woori’s invitation to head the fast-growing online banking company is seen as a rare opportunity as traditional lenders have viewed platform-based businesses, especially powerhouses like Kakao Bank, as rivals. of the sector. Executives from Yoon and Woori discussed digital innovation for about an hour, he said.

The meeting comes as lenders have closed physical branches to focus on their online and mobile services, as increased competition with fintech companies has pushed them to cooperate with their rivals old and new.

In the live-streamed online strategy meeting, Woori Bank CEO Kwon Kwang-seok called for rapid digital innovation and increased efforts to become a forerunner in digital finance.

“The management goal for 2021 is digital first, digital initiative,” Kwon said.

Woori’s traditional rival Shinhan Bank, the country’s top commercial lender by net profit, also highlighted the need for digital transformation at a similar event on Friday.

“Shinhan must transform into a digital business that functions as a connection point between its customers and the future,” said Jin Ok-dong, CEO of Shinhan Bank.

Shinhan Bank CEO Jin Ok-dong speaks at the annual lender management strategy launch meeting at the bank's training center in Yongin, Gyeonggi province on Friday.  (Shinhan Bank)

Shinhan Bank CEO Jin Ok-dong speaks at the annual lender management strategy launch meeting at the bank’s training center in Yongin, Gyeonggi province on Friday. (Shinhan Bank)

“It is crucial that our employees get creative in connecting the concepts of digital and finance based on their own ‘digital culture’ and understanding,” he added.

According to industry sources, Shinhan is planning an organizational reshuffle by the end of the month, to bolster its digital business and online capacity. It also plans to invest 300 billion won ($ 271.4 million) in building an improved digital banking system.

Korean commercial banks have partnered with local and foreign fintech companies to broaden their digital horizons, as competition in the local banking sector is expected to intensify further this year. The country’s third-largest, internet-only bank, Toss Bank is expected to start operating soon after obtaining final license approval in the first half of this year, its main operator Viva Republica said.

The top five commercial banks here – Woori, Shinhan, KB Kookmin, NH NongHyup and Hana – closed 216 offline branches last year alone, according to industry data earlier this month. The trend is expected to accelerate this year, due to a growing customer preference for mobile contactless services, coupled with lingering risks from the COVID-19 pandemic.

By Jung Min-kyung ([email protected])

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