[1mm Financial Talk] Only One Deposit Brokerage Service... The Real Intention Behind Shinhan Bank's 'Open Door and Rush Out'

Only One Partner Offers 'Instant Signup'
"About 10 More to Be Added Next Month... Will Gradually Increase"

The online deposit product brokerage service designated as an innovative financial service by financial authorities has officially launched. Shinhan Bank began offering the related service through its mobile application. With only one initial partner, the success of the service is evaluated to depend on the expansion of partnerships.

According to the financial sector on the 22nd, Shinhan Bank started providing the ‘Financial Product Comparison Service’ through its mobile banking application Shinhan SOL from the previous day. This service offers comparison, recommendation, subscription, and management of deposits and loans. Among the nine companies (eight fintech firms and one financial institution) designated as innovative financial services by the Financial Services Commission in November last year, Shinhan Bank was the first to launch the related service, surpassing fintech firms.

Shinhan Bank plans to update the financial product database (DB) daily, covering 51 financial companies for deposits and savings and 48 for loans, allowing financial consumers to easily compare products from multiple financial institutions. In particular, by utilizing MyData, the bank will analyze consumers’ transaction patterns and provide an interest rate simulation service reflecting preferential interest rates that can be immediately received, thereby enhancing customer convenience.

However, despite being the first among commercial banks to launch a deposit product brokerage service, the current Shinhan SOL app has a limitation in that only one partner institution allows ‘immediate subscription’ beyond guidance (comparison and recommendation). That single partner is Shinhan Savings Bank, an affiliate of Shinhan Bank. As of the previous day, the deposit brokerage service offers only three products available for subscription (two from Shinhan Bank and one from Shinhan Savings Bank).

Industry insiders attribute the difficulty in expanding partnerships for Shinhan Bank’s newly launched deposit brokerage service to the passive attitude of the financial sector. It is reported that negotiations for partnerships with commercial banks, regional banks, and secondary financial institutions, which are potential partners, have not been smooth.

The reason for their reluctance is that deposit product comparison and brokerage can be a double-edged sword. For example, secondary financial institutions such as savings banks offer deposit interest rates about 1 percentage point higher than first-tier banks to attract funds, which could potentially cause ‘deposit outflows’ from banks. The authorities have also set limits on deposit product sales through brokerage platforms (within 3-5% of the previous year’s new deposit and savings recruitment amount by sector) to prevent rapid money movement.

Nonetheless, Shinhan Bank decided to launch the related service first because it judged that the benefits could outweigh the drawbacks. A Shinhan Bank official said, “(In the deposit brokerage process) we might suffer some loss in terms of interest rates, but since some fintech firms already provide comparison services, this change has become inevitable,” adding, “It is better to have competitive products through interest rate competition.”

Shinhan Bank plans to gradually expand its partners by adding 10 financial institutions starting next month. A Shinhan Bank representative stated, “It is true that fintech firms that started deposit comparison services earlier initially had partnerships with only 2-3 companies,” and added, “Currently, we have partnership agreements with about 10 companies, so through system work, the number of products available for immediate subscription will gradually increase from next month.”