"Evolving Oracles... From Exclusive Wealth to Popular Choice for Single-Person Households and Young Rich [Financial Insider]"

Hana Bank Living Trust Center
Interview with Center Director Kim Hajung and Team Leader Choi Yoonjung

Kim Hajung, Head of Hana Bank Living Trust Center (right), and Choi Yoonjung, Team Leader of Living Trust Center, are posing before an interview with Asia Economy at the Hana Bank headquarters in Euljiro, Seoul. Photo by Jo Yongjun

"Beyond customers' lives to their deaths. We manage families, not just wealth transfer."

Kim Hajung, Head of the Living Trust Center at Hana Bank, defined Hana Bank's trust services this way. Trust literally means to entrust something with faith (信, trust) and delegation (託, entrust). During their lifetime, customers manage their assets according to their wishes, and after death, the financial institution manages, safeguards, and executes the trust contract as agreed.

Hana Bank, originating from Korea Investment Finance, the country's first short-term finance company, has been excellent at reading market trends and wealth flows. Hana Bank was also the first in the domestic financial sector to introduce trusts because it had a keen understanding of wealthy clients' minds. Trust services were born from quickly recognizing not only the desire to protect wealth accumulated over a lifetime but also the aspiration for it to be passed down and sustained across generations, and the wish for those intentions to continue even after death.

Kim Hajung, Head of the Living Trust Center at Hana Bank, is being interviewed by Asia Economy at the Hana Bank headquarters in Euljiro, Seoul. Photo by Jo Yongjun

Center Head Kim said, "Hana Bank's strength lies in substitute wills trusts, which are simpler in procedure than wills and have fewer legal disputes, making them preferred means of inheritance. Many customers inherit assets to their children through trusts, and the children who inherit often entrust asset management through trusts as well, naturally continuing the relationship to the second and third generations."

In the past, the main clients were high-net-worth individuals or elderly people nearing death, but recently, trust services have become increasingly popular among the general public.

Choi Yoonjung, team leader of Hana Bank's Living Trust Center, emphasized the necessity of trusts by sharing a story about an elderly customer during her branch work days. An 80-year-old grandmother, a solitary senior with no family, had a caregiver looking after her. She was a wealthy individual with 1 billion KRW in bank deposits and regularly visited the bank. After a period of absence, worried staff called her, but the caregiver repeatedly said the grandmother could not talk at that time. Shortly after, a large withdrawal from the grandmother's bank deposits occurred. It was later discovered that the caregiver had taken the money.

Team Leader Choi said, "Nowadays, the need for trusts is rapidly increasing not only for single-person households like this grandmother but also due to the emergence of the 'young rich,' remarried families, and other diverse family forms. Therefore, trusts are like living organisms that evolve with the times."

Choi Yoon-jung, Team Leader of Hana Bank Living Trust Center, is being interviewed by Asia Economy at the Hana Bank headquarters in Euljiro, Seoul. Photo by Jo Yong-jun

In fact, the customer base inquiring about trust services has diversified.

A man in his 60s with two children visited Hana Bank's Living Trust Center after the death of his wife and before remarrying. He wanted to leave the insurance money and the wealth the couple had built together to the children from his late wife. He expressed a desire to organize potential conflict factors before starting a new family.

Center Head Kim said, "Some customers come to organize assets such as inheritance and gifts like Mr. A, but there is also an increasing number of customers inquiring about social contributions or donations. The recent trend in wealth transfer is a stronger demand for wealth to be used meaningfully beyond blood relations or kinship."

Long before the concept of trusts became popular as it is now, Hana Bank foresaw inheritance issues arising from demographic changes and aging. The acquisition of Seoul Trust Bank, which held a monopoly in the trust sector in 2002, was part of Hana Bank's plan. Since then, Hana Bank has become more skilled in managing customers' assets. The former Korea Exchange Bank, which merged with Hana Bank, also had strengths in trusts. The country's first 'monthly compound interest trust,' which caused a significant stir in the industry, was a product of Korea Exchange Bank. At that time, this product alone set a new record beyond bank accounts.

Accumulating know-how in the trust field, Hana Bank launched the country's first substitute wills trust in April 2010 and opened the Living Trust Center. Currently, the trust products offered by the Living Trust Center are the most active in Korea, including money trusts, substitute wills trusts, insurance claim rights trusts, and art trusts.

Team Leader Choi said, "As of the end of Q2 this year, the substitute wills trust market size is 3.5 trillion KRW, of which Hana Bank holds 80-90%." The trust assets under management, which were only 880 billion KRW at the end of 2020, have been rapidly increasing every year.

Kim Hajung, Head of Hana Bank Living Trust Center (right), and Choi Yoonjung, Team Leader of Living Trust Center, are being interviewed by Asia Economy at the Hana Bank headquarters in Euljiro, Seoul. Photo by Jo Yongjun

Hana Bank was not only the first in the financial sector to launch substitute wills trusts but also the first bank to introduce the concept of Private Banker (PB). Currently, Hana Bank has the largest number of WM personnel among commercial banks, overseeing the trust division within the asset management group, as well as investment product and WM divisions.

As the trust market has become popularized, financial companies are rushing to enter the field. KB Kookmin Bank launched a substitute wills trust product that allows inheritance and gifting of physical gold, Shinhan Bank operates a 'Trust Lounge,' and Woori Bank has established a 'Family Trust Team' to respond.

Center Head Kim said, "I hope more competitors enter this market. The bigger the market grows, the stronger the competitiveness becomes, and better services can be provided to customers." He added, "Hana Bank's footsteps serve as a guide for latecomers, gradually expanding this market. Hana Bank's leadership in this market and its long-accumulated experience and know-how are powerful weapons."