Banks Embrace Collaboration with Rivals for Digitalization: "Cooperation Is the Only Way to Survive"

IBK Industrial Bank Collaborates with Fintech Startups
Rapid Implementation of Innovative Technologies
Joint ATM Operation by Four Major Banks

[Asia Economy Reporter Park Sun-mi]"For banks to survive competition with big tech (large information and communication companies), collaboration with other technology companies is essential. This is why they are actively pursuing partnerships and alliances with fintech and telecommunications companies. The implementation of the MyData business is expected to further activate this trend."

Lee Sang-guk, Head of the Digital Group (Vice President) at IBK Industrial Bank of Korea, who has been leading the bank's digital transformation for three years, cited collaboration with technology companies as a prerequisite for successful bank digitalization. Representative examples include 'Hanppyeom Remittance' (tentative name), which allows easy remittance to nearby users using inaudible sound waves, and an AI-based real estate rights analysis service that can drastically reduce real estate loan consultation time. Most of these services, which IBK is about to launch, were created through collaboration with fintech companies.

Vice President Lee explained, "IBK has a 'First Lab' where fintech startups can test whether their innovative technologies can be integrated into the bank." He added, "By leveraging IBK's characteristics, we discover and support startups while quickly verifying the feasibility of applying the innovative technologies developed by startups to finance." IBK plans to introduce a service next month that will be the first in the banking sector, allowing existing customers to conduct bank transactions by verifying their mobile phone identity without an ID card when visiting a bank branch.

The 'sleeping with the enemy' approach, embracing other industries and even competing banks, is a characteristic appearing not only at IBK but across the banking sector undergoing digital transformation. Since the 30th of last month, Woori Bank has been cooperating with big tech company Naver to provide a service on Naver Maps that shows the number of waiting customers at about 400 Woori Bank branches in the Seoul metropolitan area and issues mobile queue tickets. They are also preparing a service that provides waiting times by time slot through big data analysis.

NH Nonghyup Bank recently launched its first financial product utilizing customer location information received from base stations through cooperation with telecommunications companies. This savings product offers preferential interest rates ranging from 0.1 percentage points to 2.5 percentage points depending on the customer's location information authentication. From the bank's perspective, it can create customized products using customer behavior data, and customers can receive preferential interest rates by providing digital information. Starting next month, Nonghyup Bank will allow the use of the private authentication certificate 'PASS' on the lifestyle finance platform 'All One Bank.' They have also signed business agreements with the three telecom companies SK Telecom, KT, LG Uplus, fintech security company Aton, and for strengthening non-face-to-face services.

The joint pilot operation of ATMs at four Emart branches (Hanam, Namyangju Jinjeop, Dongtan, Gwangju Gwangsan) by the four major banks?KB Kookmin, Shinhan, Hana, and Woori Bank?since the 4th is also a representative collaboration case for digitalization. The banks plan to actively use the joint ATMs as an alternative to bank branch closures resulting from digitalization after reviewing the pilot operation results.