[DGB Analysis] ③ Competing with the Jun In-Bank Model 'iM Bank' App... Will It Surpass In-Bank?

Strategies to Overcome Vulnerabilities in Non-Yeongnam Regions
1.58 Million Users, Loan Amount Reaches 2 Trillion
Digital Latecomers, Competitiveness in Question

DGB Daegu Bank, which declared its transition to a commercial bank, has pulled out the 'quasi internet-only bank' card to survive amid existing large banks. By strengthening its digital sector with its own digital banking brand 'iM Bank' and achieving efficiency comparable to internet-only banks, it aims to overcome the weak business network outside the Daegu-Gyeongbuk region.

[Image source=Yonhap News]

According to the financial sector on the 12th, Hwang Byung-woo, president of Daegu Bank, said at the Daegu headquarters on the 6th, "The transition to a commercial bank will break the limitations of previous growth, and through expansion into the metropolitan area where there is high financial demand, we can realize economies of scale," adding, "We will be able to pursue a quasi internet-only bank strategy linking online and offline."

Launched in 2019, iM Bank is Daegu Bank's representative digital finance brand. As of the first quarter, the number of users reached 1,584,000. Non-face-to-face won deposits and loans through this platform amount to 3.6 trillion won and 1.9 trillion won, respectively.

In terms of total users, iM Bank does not reach the level of existing large banks or internet-only banks' banking applications, but it has achieved notable results in terms of activation. In a financial platform survey conducted by Consumer Insight in February, among iM Bank app installers, the proportion of confirmed customers (those who responded that they "use it regularly or consider it essential for daily life") was 67.2%, ranking fourth after KB Kookmin Bank's Star Banking (70.5%), BNK Gyeongnam Bank Mobile Banking (70.2%), and Shinhan SOL (70.1%).

Daegu Bank plans to utilize the DGB brand and business network in its stronghold of Daegu-Gyeongbuk, while in areas outside Daegu-Gyeongbuk where offline business networks are limited, it intends to compete through offline branch operation experience and digital finance such as iM Bank. Even before the transition declaration, in March, Daegu Bank upgraded the head of iM Bank to 'CEO (Executive Director)' and expanded the iM Bank Seoul headquarters to include functions such as ▲digital new business planning ▲IT development ▲marketing. Additionally, it has begun designing the '2023 Next iM Bank' to further advance iM Bank.

Collaboration with fintech companies is also under consideration. Previously, DGB Financial acquired NewGisTech, a fintech company specializing in robo-advisors, in 2021. President Hwang stated, "We will be a partner of innovative companies like fintech," and added, "We will strengthen digital competitiveness through collaboration."

However, the market and academic response to Daegu Bank's quasi internet-only bank strategy has been lukewarm. There are concerns about whether it can succeed in acquiring customers when internet-only banks and commercial banks have already dominated the mobile banking market. Professor Seo Ji-yong of Sangmyung University's Department of Business Administration said, "Domestic internet-only banks have considerable know-how and competitiveness in areas such as overseas remittances and funding methods, and commercial banks have also heavily invested in mobile banking following the introduction of internet-only banks, resulting in well-established services," adding, "It will be difficult for Daegu Bank to achieve mobile innovation overnight just by transitioning to a commercial bank, and significant time and effort will be required to gain a competitive edge."

A banking industry official also pointed out, "The branch-centered sales mechanism still remains, and lacking IT expertise beyond that of internet-only banks will make digital transformation difficult," and questioned, "It is uncertain how many customers would choose a latecomer app."