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Major banks are increasingly expanding their collaborations with fintech companies in order to leverage these platforms to attract more customers.

According to industry officials, Monday, Hana Bank is collaborating with Daangn Pay, the payment service for the local secondhand goods-selling platform Daangn Market, to launch a new account by the end of this year.

This is a follow-up action to the Financial Services Commission's decision, made on Sept. 5, to approve four services linking prepaid payment methods and bank accounts in order to innovate financial services further.

The selected services included the Hana Bank-Daangn Pay collaboration, as well as collaborations between KB Kookmin Bank and Samsung Financial Networks' integrated financial platform Monimo, between Woori Bank and Naver Financial's Naver Pay and between Woori Bank and CJ Olive Networks' CJ Pay.

These collaborations allow money loaded by payment service users to be stored in their bank accounts, so the users can earn interest on it. When making payments, the funds are automatically loaded from the linked accounts.

Officials noted that the biggest reason major banks are expanding collaborations with fintech companies is to enhance platform competitiveness, as platforms like Daangn Market and Naver Financial have broader customer bases compared to traditional banks.

For instance, Daangn Market has approximately 19 million monthly active users, which is about triple the around 6 million users on Hana Bank's app.

Daangn Market CEO Hwang Do-yeon, second from left, and Hana Bank CEO Lee Seung-lyul, third from left, pose after signing a strategic partnership at Daangn headquarters in Seoul, Nov. 7, 2023. Courtesy of Hana Bank

The collaboration has already yielded significant results. In 2022, Hana Bank launched an account in partnership with Naver Financial's Naver Pay and sold out 500,000 accounts within six months. Last year, the bank received approval from the financial authorities for an additional 1 million accounts, which are currently being sold.

In June, KB Kookmin Bank signed a business agreement with Samsung Financial Networks and has since been preparing for the launch of a deposit and withdrawal account for Monimo users within the first quarter of next year. Monimo enables customers to access all of Samsung's financial services at once.

Woori Bank is also collaborating with Naver Financial as well as CJ Olive Networks. As a latecomer in this space, the bank aims to create synergy across various industries.

Among the four major banks, Shinhan Bank is the only one that has not disclosed plans for a prepaid charging service. Instead, the bank is focusing on strengthening its own platform.

“As banks have reached their limits in acquiring customers on their own, they are expected to continue seeking out new partners,” an official from a major bank in Seoul said.

Meanwhile, internet-only banks, which possess their own platform competitiveness, are also collaborating with the retail sector to expand their customer bases.

A notable example is KakaoBank, which launched a 26-week installment savings plan in partnership with retailers like supermarket chain E-Mart and Hyundai Department Store.

The savings plan in collaboration with E-Mart surpassed 100,000 accounts within just one day of its launch.