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| A promotional image for Shinhan Bank's new food delivery service app / Korea Times file |
By Yi Whan-woo
Commercial banks appear to be getting a sense of how to counter big tech firms, which have been muscling in on the banking industry by capitalizing on their digital prowess as platform operators.
The traditional lenders are becoming more sophisticated over the years in their breakthrough strategies, which are characterized by maximizing their potential as platform operators on the one hand, and getting help from an ally in the ICT sector to make up for their digital shortcomings on the other hand.
Although still in their nascent stages, such strategies are an improvement considering the banks had previously only been mimicking big tech firms and offering supplementary, non-banking services on their respective apps.
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| Shinhan Bank CEO Jin Ok-dong, left, and KT President Park Jong-ook hold a certificate of strategic partnership during a signing ceremony at the lender's headquarters in central Seoul, Monday. Yonhap |
The latest move comes from Shinhan Bank, perhaps the most ardent pursuer to a digital transformation among the country's five major lenders, which include KB Kookmin, Hana, Woori and NongHyup.
Being the only Korean bank to join this year's Consumer Electronics Show (CES), the world's largest IT fair, Shinhan formed a partnership with telecom giant KT, Monday, to cooperate in kicking off 23 projects, all related to digital business.
The projects range from platforms, artificial intelligence and non-fungible tokens (NFTs) to the metaverse.
The 23 are in line with four broader goals set jointly by the two sides, to launch a new platform-based business, create a digital strategic investment fund, offer tailor-made services for small business owners and young people in their 20s and 30s and foster promising startups.
In a bid to enhance their digital alliance, Shinhan and KT also agreed to purchase each other's shares worth 437.5 billion won ($367.8 million).
The deal will make Shinhan the second-largest shareholder of KT with a 5.48 percent stake.
The two sides will also form a joint taskforce consisting of financial experts from Shinhan and IT experts from KT.
"The strategic partnership is expected to be a driving force that can further accelerate Shinhan's digital transformation," the bank said.
Shinhan has apparently been seeking to become a platform operator by mobilizing its customer data, following moves by big tech companies such as Naver and Kakao.
In December, it launched a domestically developed app for a food delivery service, a rapidly growing market dominated by big tech companies.
Shinhan said it advanced into the on-demand food delivery service business after concluding that it has an edge over the bigger competitors in terms of lower commissions and other financial benefits.
The bank set its commission rate at 2 percent, far lower than those of major food delivery platform operators which average 11.4 percent.
The four other lenders have made less progress than Shinhan, but they are stepping into non-banking sectors gradually using their apps as platforms.
Woori launched a courier service in partnership with convenience store chain 7-Eleven.
Hana came up with a service that allows its app users who are interested in getting a new car to compare car prices on the market.
KB Kookmin partnered with Yogiyo, a food delivery platform, to enable its clients to order food using the bank's app.
Nonghyup sells flowers on its app, in cooperation with the Flower Farmers Association, one of its clients.
