Financial Companies Tapping into Telecom Business... Expecting Synergy Effects from Non-Financial Data

[Asia Economy Reporter Yu Je-hoon] Domestic major financial companies are drawing attention as they are successively entering the budget phone business. As 'data' emerges as a new growth engine for financial companies, it is interpreted that they are considering the synergy effect between their vast financial data and non-financial data in the ICT sector.

According to the financial sector on the 6th, Viva Republica, which operates the comprehensive financial platform Toss, acquired 100% of the shares of Merchant Korea, a Mobile Virtual Network Operator (MVNO), last month for about 10 billion KRW, officially entering the budget phone business. This is the second time a financial company directly operates a telecommunications business, following KB Kookmin Bank.

Merchant Korea, established in 1998, has been engaged in the telecommunications business for over 20 years and serves as an auditor member of the Korea Budget Phone Telecommunications Operators Association. It was selected as LG Uplus's first budget phone operator and currently has contracts with all three major telecom companies. Following this acquisition, Toss plans to provide budget phone subscription services through its application. The goal is to improve the entire process from plan exploration to activation and offer opportunities to reduce communication costs.

Before Toss, KB Kookmin Bank, which is conducting the budget phone business (KB Kookmin Bank Liiv M) through the designation of innovative financial services as the first in the financial sector, has established itself as a strong player in the market with over 300,000 subscribers. Recently, it has expanded its partnership network from LG Uplus to KT, broadening its reach.

Even if they do not directly enter the telecommunications business, some financial companies are expanding their scope through collaboration with telecom companies. Shinhan Bank collaborates with KT to sell 12 partnership plans with KT M Mobile, Skylife, Stage Five, Sejong Telecom, and others on the Shinhan SOL app. Hana Bank has also launched budget phone plans in partnership with SK Telink. Separately, Hana Financial Group recently expanded its cooperation by exchanging shares between Hana Card and SK Square, a subsidiary of SK Telecom.

The reason financial companies are successively entering the telecommunications business is attributed to non-financial data. For example, payment records for communication fees and mobile phone usage information obtained through the telecommunications business can be utilized to enhance authentication and credit evaluation services recently promoted by financial companies. Especially since there are consumers not covered by their own financial data, synergy effects are expected. A financial industry official said, "Financial companies' data is qualitatively much more dynamic, but it is also true that there are thin filers not covered by financial data alone," adding, "Cases of collaboration between financial companies and telecom companies will increase further in the future."