Flexible and Horizontal Organization... Banks' Culture Changes (Comprehensive)

Conservative Bank's Transformation... Eliminating Team Leaders and Using English Names
Creating a Slim and Flexible Structure

[Asia Economy Reporter Park Sun-mi] The banking sector, traditionally regarded as a representative industry with a conservative corporate culture, is rapidly reorganizing into a more horizontal and flexible organizational culture. This shift is driven by the need for a flexible and efficient organizational culture to respond to the fast-changing financial environment, including non-face-to-face financial transactions and competition with big tech (large information and communication companies).

According to the banking sector on the 26th, Kookmin Bank is conducting detailed personnel and organizational restructuring until the end of February following group-wide personnel changes made that day. The bank aims to simplify the previously complex reporting system by reducing the number of team leaders by up to half to enable faster decision-making. The reporting structure, which previously connected team members to department heads through team leaders, will be changed to a system where communication goes directly from team members to department heads by reducing team leaders. This reflects the will of CEO Heo In, who emphasized in his New Year's address that "the speed of responding to customers and the market must be dramatically increased, and an organizational culture of autonomy and creativity must be spread."

Earlier, Hana Bank also implemented a radical organizational restructuring to promote a horizontal organizational culture and rapid decision-making. Hana Bank reduced its existing structure from 18 groups, 1 research institute, and 19 headquarters (units) to 15 groups, 1 research institute, and 17 headquarters (units) to streamline the organization and speed up decision-making processes. The bank expanded and established a new culture of calling employees by English names instead of ranks such as manager or director across all affiliates and branches. In fact, Hana Bank CEO Ji Sung-kyu is called by his English name ‘Glocal’ instead of the title of bank president.

Shinhan Bank also shortened its executive rank system from three levels?vice president, deputy vice president, and managing director?to two levels?vice president and managing director?to accelerate decision-making and strengthen business execution capabilities. Additionally, to promote a horizontal organizational culture, ranks such as manager and deputy manager were eliminated, and titles were unified; some departments have adopted the title ‘Pro’.

Banking Sector Streamlines Organizations for Faster and More Efficient Decision-Making
Banks Join Organizational Culture Changes Amid Changing Environment

Woori Bank also focused on streamlining its organization. It abolished three business groups and reduced the number of executives to significantly slim down the organization. The Personal Group and Institutional Group were merged into the ‘Personal & Institutional Group’ with the Real Estate Finance Division placed under it, and the Corporate Group and SME Group were merged into the ‘Corporate Group’ with the Foreign Exchange Business Division placed under it. The HR Group and Business Support Group were also integrated into a newly established ‘Management Support Group’ to enhance organizational efficiency. Despite the integration and slimming down of the organization, the establishment of a new ‘Sales & Digital Group’ to strengthen the linkage between digital innovation and sales and to enhance both face-to-face and non-face-to-face sales capabilities is a noteworthy aspect.

NongHyup Bank focused on expanding the agile organization called ‘cells’ in this year’s organizational restructuring. CEO Kwon Jun-hak, who began his term this year, emphasizes that building an agile organizational culture is crucial to sensing changes in customers and the market and responding promptly.

While many domestic companies have applied horizontal organizational cultures and organizational slimming, these changes have progressed slowly in the somewhat conservative financial sector. A banking industry official said, "Since last year, with the spread of COVID-19 accelerating digital transformation and the need for preemptive responses in competition with big tech increasing, the pace of organizational culture change in the banking sector is also accelerating. The entire industry recognizes that building a horizontal organizational culture and slimming down the organization are inevitable for innovative finance and rapid decision-making."