Card Industry Adds Numerous New Business Areas to Articles of Incorporation During Shareholders' Meeting Season
[Asia Economy Reporter Yu Je-hoon] The card industry is keenly eyeing the development of new businesses utilizing its strength in data. This is because the core business of payment and settlement is facing challenges in both profitability and growth due to continuous card fee regulations and challenges from big tech companies.
According to the financial sector on the 29th, the card industry has recently prepared to enter new businesses through amendments to their articles of incorporation during the regular shareholders' meeting season. KB Kookmin Card explicitly stated the personal business credit evaluation business, which received full approval from financial authorities at the end of last year, as a business purpose. Samsung Card added a large number of new business purposes including ▲Personal Credit Information Management (MyData) ▲Investment Advisory Business ▲Personal Business Credit Evaluation Business ▲New Technology Business Finance ▲Data Specialized Institution.
In particular, the data sector is an area the card industry is focusing on. Along with MyData, there is growing interest in data specialized institutions. It is reported that Shinhan, Samsung, and BC Card have submitted preliminary applications for data specialized institutions to the Financial Services Commission. Data specialized institutions are businesses that support data combination between companies, enabling the integration of data not only from credit card companies but also from various fields such as telecommunications and real estate, attracting industry attention due to the potential for building diverse business models.
In the automobile installment finance market, traditionally the domain of capital companies, credit card companies have recently intensified their challenges. This is because it can create opportunities to improve profitability and utilize various customer data generated during new and used car transactions. As of the end of the third quarter last year, the automobile installment finance assets of six domestic card companies (Shinhan, KB, Kookmin, Woori, Samsung, Hana, and Lotte Card) amounted to KRW 9.7948 trillion, an increase of about 13% compared to the previous year. Hana Card, which started its automobile installment finance business last year, showed rapid growth with related assets reaching KRW 365.7 billion in its first year.
Additionally, credit card companies are actively discovering new businesses. Shinhan Card and KB Kookmin Card are accelerating their personal business credit evaluation business, while BC Card has challenged the loan comparison service market, which fintech companies had been branching into. Furthermore, Shinhan Card, KB Kookmin, BC Card, and Hyundai Card appear to be actively entering the virtual asset sector, including digital assets such as non-fungible tokens (NFTs).
The reason the card industry is actively pursuing new business development centered on data is that the core payment and settlement sector is expected to suffer profitability deterioration due to continuous fee regulations and challenges from fintech companies. According to the Bank of Korea, as of the fourth quarter of last year, the proportion of non-face-to-face payments through mobile devices was 41.5%, and among these, the usage rate of services provided by fintech companies reached 61.7%. If payment methods bypassing existing payment methods, such as Buy Now Pay Later (BNPL), spread in the future, card companies could face existential threats.
Lee Hyuk-jun, Head of Financial Evaluation at NICE Credit Rating, stated in a report last month, "Payment and settlement is a business with strengths in big data collection, and credit card companies are recently attempting to transform into data specialized companies that generate profits using big data," adding, "If meaningful results are not achieved, credit card companies may be reintegrated as a business unit of banks as in the past or ultimately disappear."
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