Business Barriers Removed Through Banking Sector Partnerships

[Asia Economy Reporter Park Sun-mi] As commercial banks aggressively pursue business partnerships to enter various sectors connected to finance, the high barriers to new non-financial businesses are disappearing.

According to the banking sector on the 15th, Shinhan Bank will start a food delivery service through its application (app) "Ttaenggyeoyo" from December 22. This is the first case of a financial company entering the food delivery business, following Shinhan Bank's designation by the Financial Services Commission last December as an innovative financial service for building a delivery app. At that time, the Financial Services Commission announced it would allow banks to enter platform businesses, and Shinhan Bank was the first in the industry to receive approval to install a food order brokerage platform on its banking app.

However, recently other banks have also launched similar services through partnerships with existing food delivery apps. Businesses that were possible through innovative financial service designation have become easily accessible through inter-industry business partnerships. KB Kookmin Bank signed a business partnership this month with the order delivery platform company Yogiyo and listed a Yogiyo banner on its banking app KB Star Banking, enabling the use of order delivery services. Since the Yogiyo app also allows access to KB Star Banking, linking financial and food delivery services has become possible without separate approval procedures from financial authorities. BNK Gyeongnam Bank also signed a business agreement this month with the delivery service operator Meokgaebi to promote region-based lifestyle financial services.

Active business partnerships are also unfolding in the telecommunications industry, which can create synergies with finance. KB Kookmin Bank’s budget phone business "Liiv Mobile (Liiv M)," designated as the first innovative financial service by the Financial Services Commission in April 2019, was the first case of a financial institution entering the budget phone business. However, recently, budget phone services in the banking industry have lowered business barriers through partnerships. Hana Bank, which has partnerships with SK Telecom, SK Telink, and others, launched a budget phone plan that allows budget phone users to enjoy financial and telecommunications benefits when using Hana Bank’s financial services, effectively providing a service similar to Kookmin Bank’s budget phone business. Shinhan Bank also enabled the launch of a specialized financial-telecom bundled plan through a business agreement with Stage Five, a Kakao affiliate engaged in 5G and budget phone businesses.

Woori Bank has been promoting convergence business and customer-related product service development across different industries through a business partnership with the medical information transmission platform G&Net since July. Earlier this year, Woori Bank introduced the "Fast Claims Service for Indemnity Insurance," which allows quick and convenient insurance claims. For patients hospitalized with indemnity insurance, Woori Bank is expanding innovative new business areas such as the "Hospital Bill Prepayment Service," which reduces hospital expenses by using Woori One Banking’s non-face-to-face loan products, and the "Prescription Transmission Service," which sends prescriptions to pharmacies via mobile.

A bank official explained, "There is a difference in the scope of services and strategic development potential between conducting new non-financial businesses through business agreements and directly operating them through innovative financial service designation. Even if there is little difference in service provision, business partnerships have the advantage of increasing customer touchpoints without risk, while direct business operation through innovative financial service designation allows for long-term, sustainable business operation rather than one-off projects."