Banks expand retail, digital ties while cutting costs on conventional operations - The Korea Times
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Banks expand retail, digital ties while cutting costs on conventional operations

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Seen above is a convenience store that will be launched under a partnership between CU and Hana Bank. The store will open at the end of September in Seoul. Courtesy of BGF Retail
Seen above is a convenience store that will be launched under a partnership between CU and Hana Bank. The store will open at the end of September in Seoul. Courtesy of BGF Retail

By Lee Min-hyung

Korean banks are seeking fresh revenue sources by partnering with retail and IT firms, as part of their all-out digital transformation strategy.

Major lenders here ― such as KB, Shinhan, Hana and Woori ― expect such ties to help them reshape their brand identity as digitally-agile financial firms, thereby attracting more customers in all age groups.

For years, banks resorted to their mobile platforms or sales offices when promoting their products or drawing new customers. But the outbreak of the COVID-19 pandemic last year rapidly changed the marketing landscape, with banks endeavoring to create a much younger image through partnerships with other industry players.

Hana Bank recently joined hands with BGF Retail, the operator of the CU convenience store chain here, and both sides plan to open a special store in which the bank will establish an automated teller machine that allows customers to handle a variety of banking needs, including opening accounts and security card issuances. The store will open sometime around the end of September in Seoul.

The lender also plans to launch financial products and services under the alliance with CU, enabling Hana customers to receive coupons that can be used at the store.

Shinhan Bank is teaming up with GS Retail, which runs the GS25 convenience store chain to co-develop innovative stores and special financial products targeting GS25 customers.

They plan to open special convenience stores where an artificial intelligence (AI) bank clerk will help customers with their banking needs.

KakaoBank, the nation's leading internet-only bank, caused a huge sensation by launching savings accounts under a partnership with E-mart and Market Kurly, an online grocery retailer, last year. The accounts attracted 560,000 and 240,000 subscribers, from each store respectively, helping KakaoBank enjoy huge marketing effects.

Banks are also widening their alliance with IT firms amid the rapid rise of big data and online banking.

Woori Bank is partnering with mobile carrier KT, which along with nine other companies and research organizations launched the AI One Team last year. Woori is also a member of the alliance and is developing AI-oriented financial services.

The burgeoning digital marketing will speed up the closures of banks' branch offices. According to data from the Financial Supervisory Service, the total number of branches owned by Korean banks here stood at 6,326 as of the end of June 2021, down by 79 from the end of last year. The rapid pace of the decline is particularly noteworthy.

Banks closed down 23 branches in 2018, but the number more than doubled to 57 in 2019 ― 304 were shut down in 2020 when the digital paradigm shift started picking up steam in the industry.

"Banks and other financial firms will continue to cut their fixed costs by closing down conventional offices and focusing more on investing in other digital-oriented revenue areas," a banking industry source said.



Lee Min-hyung mhlee@koreatimes.co.kr


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