"Someone Didn't Pay the Membership Fee Again" Now Easily Caught... The Evolution of 'Group Accounts' [Financial Microscope]

Banks Compete Over Group Accounts
Integrating Various Features
Offering High Interest Rates
Boosting Customer Acquisition and Securing Low-Cost Deposits

When someone asks, "Who hasn't paid the membership fee this month?", an artificial intelligence (AI) group treasurer now appears to easily organize a list of those who haven't paid. The "Group Account," which has become essential for group activities, is gradually evolving. In addition to KakaoBank, the pioneer of group accounts, commercial banks and secondary financial institutions have recently launched their own group account products. For banks, these accounts are a way to secure low-cost deposits, leading to fierce competition to attract group account customers.

The "Group Account," which has become essential for group activities, is gradually evolving. Getty Images

Evolving Group Accounts...AI Treasurer Function Added

KakaoBank recently introduced an AI group treasurer for its group account service. The AI group treasurer now performs key tasks that were previously handled by a human treasurer. With the addition of the AI treasurer function, the service goes beyond simple deposit and withdrawal checks to analyze expenditures by period and usage, as well as consumption patterns. KakaoBank, which proactively launched its group account in 2018, has rapidly expanded its market share. As of the end of the third quarter this year, the number of group account users reached 12.2 million, with a balance of 10.5 trillion won. As the number of group account users increases, KakaoBank's proportion of low-cost deposits is also rising. In the third quarter of this year, the proportion of low-cost deposits was 59%, up 0.6 percentage points from the previous year, and significantly higher than the overall banking sector average of 39%.

Toss Bank offers a "co-leader" function for its group accounts. The group leader can share withdrawal, transfer, and card payment permissions with other members. In September, an automatic payment feature for apartment maintenance fees was also added. By providing "lifestyle-oriented" services, Toss Bank aims to differentiate itself by targeting two-person users such as newlyweds and roommates.

Financial Planning with Group Accounts...Some Products Offer 4.1% Annual Interest

Commercial banks and secondary financial institutions are also joining the competition for group accounts. Shinhan Bank launched the "SOL Group Account" in February. By enrolling in the "Group Savings" feature within the group account, users can earn up to 4.1% annual interest on deposits up to 1 million won per month. Shinhan Bank has also improved convenience by offering a "dedicated interface for small groups."

Users of KB Kookmin Bank's group account service can join the "KB Group Safe," a product for storing surplus group funds. Each safe can hold up to 10 million won and offers an annual interest rate of 2%.

Among secondary financial institutions, IBK Savings Bank launched the "IBK Group Account" in October. The interest rate for the group account varies depending on the balance. For deposits of up to 100 million won, an annual interest rate of 2.5% is offered.

Saemaeul Geumgo also launched a group account service on its main app, "MG The Banking," in August. Customers with a Saemaeul Geumgo account can open a group account. In addition to managing membership fees, features such as a group bulletin board and group notifications have been added. Group leaders can share schedules or announcements with members through the group bulletin board.

Increasing Use Among Middle-Aged and Older Adults

The age range of group account users is becoming more diverse. While younger people were the main users at first, the proportion of users in their 50s and older has recently increased significantly. As of the third quarter of this year, KakaoBank group account users aged 50 and above accounted for 30%, the highest proportion, followed by those in their 30s (28%), 40s (26%), and those in their 20s or younger (16%). At the end of 2019, users aged 50 and above made up just 8.5%, showing a significant increase among middle-aged and older adults.

An official from the banking sector said, "When a group leader suggests using a group account, members naturally follow, which makes it highly effective for attracting new customers. Also, as the number of users increases, banks can secure more low-cost deposits, which is why they are competing to offer group accounts."