Why Banks' Card Companies Are Creating 'Kabang·Geumgo PLCC' [1mm Financial Talk]

Targeting Youth with In-Banking, Seniors with Saemaeul Geumgo
"There Is a Positive Effect of Reducing Card Recruitment Costs"

Bank-affiliated card companies, backed by strong support, are unusually partnering with internet-only banks and mutual finance sectors to develop private label credit cards (PLCC). The plan is to attract a diverse customer base ranging from youth to seniors.

According to the financial sector on the 5th, Shinhan Card, the number one credit card company, plans to launch the ‘Kakao Bank PLCC’ product in the first half of next year. Using Shinhan Card’s big data infrastructure, they will analyze and reflect the consumption and lifestyle patterns of customers in their 20s and 30s, and implement various services such as card performance, benefit details, and additional services through the Kakao Bank application (app). Shinhan Card is also considering expanding cooperation with other internet-only banks such as Toss Bank and K Bank.

Hana Card recently signed a partnership agreement with the National Credit Union Federation of Korea for the ‘MG+ (MG Plus) Credit Card.’ The MG Plus credit card is a dedicated PLCC brand of Saemaeul Geumgo. Unlike existing affiliate cards, the MG Plus credit card allows customers to use various services such as card application, usage consultation, reissuance, and cancellation at Saemaeul Geumgo branches. The two parties plan to launch the first product in October.

It is considered unusual for card companies under financial holding companies to develop PLCC products with other financial institutions. PLCC refers to card products that prominently feature a specific brand and offer benefits tailored to that company. Card companies have mainly collaborated with major consumer outlets of their customers. Representative examples include ‘Korean Air Card (Hyundai Card),’ ‘Coupang Wow Card (KB Kookmin Card),’ and ‘CGV Woori Card.’ There have been cases of collaboration between card companies and banks such as Hyundai Card-SC First Bank and BC Card-Suhyup Bank, but these were mostly affiliate cards (CLCC) rather than PLCCs.

The reason Shinhan Card and Hana Card are promoting financial institution PLCC products is to secure a diverse customer base. Shinhan Card, which has about 32 million customers based on integrated membership, plans to pioneer younger customer segments through cooperation with internet-only banks. Kakao Bank has already gained popularity among young people, including teenagers, with financial products using Kakao Friends characters like Ryan and Apeach.

Hana Card, having secured many MZ generation (Millennials + Generation Z) customers through the success of its overseas travel-specialized card ‘Travelog,’ appears to be aiming to reach senior age groups by partnering with Saemaeul Geumgo. A financial sector official said, “Saemaeul Geumgo handles relatively high-interest savings and deposit products, so there are many senior customers sensitive to interest rates,” and added, “Hana Card likely judged that it needs to attract these customers as members.”

Professor Seo Ji-yong of the Department of Business Administration at Sangmyung University analyzed, “Traditionally, card companies partnered with companies that had high market shares, but recently they are uniquely developing PLCCs with internet-only banks and Saemaeul Geumgo,” adding, “It is a strategy to attract new customers and secure loyal customers by preventing churn.” He also noted, “As funding costs and bad debt costs increase, partnerships with banks and other financial institutions also have the positive effect of reducing acquisition costs.”