[Asking the Four Major Financial Groups About New Strategies] Jin Okdong, Chairman of Shinhan Financial Group: "Agile Response Is Crucial in the AI Era"

New Year's Interview
AI Revolution Marks an Inflection Point in the Financial Order
"We Will Accelerate AI and Digital Transformation"
Diversifying Revenue Structure in Non-Banking Segments
Securing a Leading Position in Future Strategic Businesses

Jin Okdong, Chairman of Shinhan Financial Group. Photo by Shinhan Financial Group

Jin Okdong, Chairman of Shinhan Financial Group, emphasized on January 6 that "agile responses are essential in the era of artificial intelligence (AI)."

In a New Year's written interview with The Asia Business Daily, Chairman Jin stated, "I believe that the current period-marked by the AI revolution, the emergence of the digital asset era, and the strengthening influence of platforms-represents an inflection point where the existing financial order is being reinvented."

This year, Shinhan Financial Group plans to accelerate both AI transformation (AX) and digital transformation (DX). The group is also outlining a vision to enhance its competitiveness through AX and to secure leadership in the digital asset ecosystem.

"Accelerating AI Transformation and Productive Finance... Risk Management Is Key"

Regarding the outlook for the financial industry this year, Chairman Jin said, "We are in a period where, amid a low-growth environment, AI and digital transformation, stronger internal controls, and the expansion of productive finance are all required simultaneously." He added, "Rather than focusing solely on external growth, the ability to manage risk and secure customer trust will determine the competitiveness of financial companies."

On the domestic and global economic situation, Jin assessed that the phase of high interest rates and high inflation is easing. He explained, "Due to ongoing global geopolitical risks and uncertainties in the monetary policies of major countries, I expect a period of stability to continue for some time. Since there is a difference in the pace of recovery between exports and domestic demand, I anticipate a gradual trend rather than abrupt short-term changes."

Regarding the ongoing high exchange rate, Jin said, "We are continuously monitoring major risk factors, including sensitivity to exchange rates," and added, "We are maintaining a conservative capital management approach that comprehensively oversees the impact on our capital ratios." An increase in the exchange rate affects the Common Equity Tier 1 (CET1) ratio of financial holding companies. The CET1 ratio, calculated by dividing CET1 by risk-weighted assets (RWA), is an indicator of a financial company's ability to absorb losses.

Chairman Jin further stated, "We will strengthen our risk management capabilities to proactively ensure that changes in the external environment do not place excessive burdens on the group’s capital soundness." He also emphasized, "Based on stable capital soundness (CET1 ratio of 13.1% or higher), we will continue to pursue profitability improvement and enhance corporate value."

Advancing Non-Banking Business Segments... Continuing Mutual Growth

Chairman Jin also announced plans to further diversify the revenue structure of the group’s non-banking segments. This year, as government regulations on household loans continue and the base interest rate is expected to be lowered, a decline in net interest margin (NIM) is inevitable. He said, "We aim for gradual profit improvement by strengthening risk management capabilities and expanding group-wide synergies." He continued, "We will establish a composite revenue base centered on fees, platforms, and non-banking operations, and advance our businesses in wealth management (WM), investment banking, retirement pensions, and insurance."

The group will also continue efforts to secure a leading position in future strategic businesses. Chairman Jin explained, "Through platforms such as 'Ddanggyeyo,' we will support small business owners and local communities, and expand customer touchpoints based on AI and digital transformation." 'Ddanggyeyo' is a food delivery platform and a non-financial service of Shinhan Bank, which Chairman Jin personally oversaw from planning to launch during his tenure as president of Shinhan Bank. The platform has recently achieved results, such as surpassing 7.62 million members, in synergy with the Lee Jaemyung administration's "livelihood recovery" policy.

Additionally, Chairman Jin stated, "We will strive to secure financial leadership through accelerated AX and DX, strengthen competitiveness at customer touchpoints, and establish leading positions in wealth management, global business, and future strategic sectors."