Woori Financial Group Adopts 'Direct Execution by Affiliates' for IT Operations

IT Development Period Reduced by Up to 50%
Annual Cost Savings of 15 Billion KRW

Woori Financial Group has completed the transition of its group IT operation method to a 'direct execution method by affiliates' such as banks and card companies. With this transition, Woori Financial expects to reduce IT development time by up to 50% and save annual costs of up to 15 billion KRW, which can be reinvested in new initiatives.

On the morning of the 11th, Woori Financial held a press conference at its headquarters in Jung-gu, Seoul, attended by Vice President Ok Il-jin of the Digital Innovation Division, to announce the expected effects and future plans of the IT operation method restructuring aimed at strengthening digital capabilities.

Since establishing its holding company system in 2001, Woori Financial has operated under a consignment system among group companies, where its IT subsidiary Woori FIS performed IT tasks on behalf of Woori Bank, Woori Card, and others. However, over the past decade, recognizing this system as inefficient, the group has been pushing for governance restructuring. Nevertheless, due to many issues such as personnel transfers between group companies, no significant progress had been made.

In particular, prior to this restructuring, Woori Financial actively benchmarked the case of DBS Bank in Singapore. DBS switched to an in-house IT operation method in 2016 and, based on enhanced capabilities, discovered various non-interest income sources through diverse digital businesses. As a result, its market capitalization increased 2.2 times, and it received high evaluations for successful overseas expansions into countries such as India and Indonesia.

Accordingly, since his inauguration in March last year, Chairman Lim Jong-ryong of Woori Financial selected 'New Group IT Governance' as a key management task and formed an IT restructuring consultative body under the holding company’s leadership to actively promote governance restructuring. Consequently, at the end of November last year, Woori Bank, Woori Card, and Woori FIS signed an IT business transfer agreement. Subsequently, about 780 bank-dedicated employees and about 170 card-dedicated employees from Woori FIS were transferred to Woori Bank and Woori Card, respectively. This accounts for 90% of Woori FIS’s total workforce.

Woori Financial expects the IT development period to be shortened by up to 50% compared to before due to this governance restructuring. With reinforced personnel and the development and maintenance process significantly reduced from the previous seven steps via Woori FIS to three to five steps, the IT development period, which used to take up to 30 days, is expected to be reduced to within two weeks.

The cost-saving effect is also considerable. By minimizing the proportion of outsourced development and eliminating overlapping planning and quality management tasks between the bank, card company, and subsidiaries, Woori Bank can reduce approximately 13 billion KRW and Woori Card about 2 billion KRW in annual selling and administrative expenses, totaling 15 billion KRW per year. This secures resources to invest in digital and IT areas.

Woori Financial plans to strengthen its digital business starting from this governance restructuring. Representative projects include the full reconstruction of the Woori WON Banking system scheduled for release in the second half of the year, the AI Banker to be launched in March, digital new businesses based on Banking as a Service (BaaS), and the establishment of digital asset infrastructure such as Security Token Offering (STO).

A Woori Financial representative stated, "As we have set this year’s management goal as 'Leap to a Leading Financial Group' and are reorganizing our lineup, this IT governance restructuring will be a significant momentum. Last year, we established a mobile-centric development environment and advanced cloud capabilities to prepare a development foundation suitable for the digital era. With the introduction of in-house IT development for the bank and card companies through this restructuring, we have completed all preparations to secure digital competitiveness."