[1mm Financial Talk] From Commercial Area Analysis to Closure Support... Why Banks Are Directly Consulting Small Business Owners

Banks Form TF to Discuss Consulting Plans
Korea Federation of Banks Establishes Dedicated Team Last Month
KB Kookmin, Shinhan, Hana Launch Their Own Consulting Programs
"Supporting the Small Business Ecosystem Beyond Financial Assistance"

The banking sector is expanding its support for small business owners from financial assistance to consulting services. In this regard, a task force (TF) has been established within the banking sector, and consulting plans are expected to be announced as early as this month. Although this is a business outside their core operations and not immediately profitable, it appears that supporting the small business ecosystem is considered beneficial for banks in the long term.

According to the financial industry on the 10th, the Korea Federation of Banks has been discussing consulting plans for small business owners by forming a working-level TF with banks since early this year. In relation to this, a dedicated team called the Win-Win Support Team was established internally last month.

Typically, banks support small business owners through financial assistance such as interest rate reductions, loan limit expansions, and maturity extensions. The TF is focusing on expanding the scope of support to include consulting services. This includes various areas such as commercial area analysis for prospective entrepreneurs, tax and legal consultations for existing business operators, and consulting on closure procedures for those closing their businesses.

Currently, commercial banks such as KB Kookmin Bank, Shinhan Bank, and Hana Bank are already providing consulting services. KB Kookmin Bank launched the 'KB SOHO Consulting Center' in 2016 and currently operates 13 centers, with plans to offer non-face-to-face services as well. Shinhan Bank opened the 'SOHO Academy' in 2017 and has restructured its previously single-level education program into beginner, intermediate, and advanced courses starting this year. Hana Bank collaborates with 'ChangTalk,' a platform that shares business veterans' operational know-how, to provide one-on-one mentoring services called 'Hana More Special Customized Consulting.'

The TF's goal is to gradually expand the consulting services currently offered by some banks to the entire banking sector. This involves creating bank-specific programs and establishing regional consulting centers for each bank. Plans are also being discussed to create dedicated counters within existing branches and to convert closed branches for this purpose. To reduce the burden on banks, options such as establishing joint centers or providing services in cooperation with related organizations and external professional institutions are also being considered. There are also discussions on increasing utilization by linking consulting with financial support, such as offering preferential interest rates or increasing loan limits upon receiving consulting.

The banking sector's genuine commitment to consulting for small business owners stems from the belief that supporting the management ecosystem of small businesses is more beneficial to banks in the long run than simple financial support. A banking sector official said, "Although this is not a business that yields immediate results or is directly linked to profits, enhancing the competitiveness of self-employed and small business owners helps banks manage risks such as delinquency rates." Another banking sector official added, "It is also necessary from a customer management perspective because it allows banks to proactively understand customers' business conditions and build trust to secure excellent customers."

A Korea Federation of Banks official said, "Several TF meetings have already been held," adding, "Once concrete plans are developed, we will support not only commercial banks but also regional banks and internet banks to cultivate a consulting DNA."