Korean financial groups offer unconventional services
SEOUL, June 13 (UPI) -- South Korean financial groups are increasingly venturing beyond traditional banking, offering services like food delivery and used car platforms, which blur the boundary between finance and daily life.
Shinhan Bank, one of the country's leading lenders, has announced that its food delivery app surpassed 5 million users, four years after its debut in 2022.
Initially, the service was available in just four cities, including Seoul, which prompted critics to question whether it would be able to stay alive in competition with established players.
However, Shinhan expanded the service across the country in 2023 and recorded rapid growth. Now, it runs 24/7 through both a dedicated delivery app and Shinhan's banking app.
"Our delivery app is aimed at supporting small business owners. Hence, we operate on a significantly reduced commission rate of just 2%,compared to the market average of around 10%," a Shinhan spokesman told UPI.
"Such an approach appears to have worked, as more than 30 regional governments have partnered with us. Going forward, we will continue to focus on helping small businesses boost their sales and profits," he said.
The experiment by Shinhan Bank, a representative unit of Shinhan Financial Group, is not an isolated case. Other Korean financial firms also have begun to offer lifestyle services unrelated to conventional financial sectors.
In particular, Shinhan's nemesis KB Financial Group was faster in tapping into the non-finance business.
Its subsidiary, KB Capital, created an all-in-one used car platform in 2016 to introduce a one-stop service for buying, selling and financing used cars. It has grown into one of the country's top three players with more than 3 million subscribers.
Unlike existing rivals, most listings of the KB platform come from actual car owners rather than dealers. The peer-to-peer model not only reduces middleman costs, but also aligns with consumer demand for transparency and price fairness, according to the company.
"In 2016, the used car transactions business in Korea was widely regarded as a 'lemon market.' Consumers were concerned that they couldn't be sure of a vehicle's true condition or history. We attempted to deal with that," a KB Capital representative said.
"By focusing on real-owner listings, integrating financing options,and providing vehicle warranties, we've helped reshape the used car market into one that consumers can finally trust," he said.
Market observers believe that this expansion into the lifestyle realm is only beginning although there are regulatory challenges.
"The financial market here is overcrowded, leading to hyper-competition. Hence, financial groups are searching for new cash cows," Seoul-based consultancy Leaders Index CEO Park Ju-gun said in a phone interview.
"But legal restrictions on non-finance business remain a major hurdle. The new administration may ease such regulations, but it seems the possibility is not so high," he said.
President Lee Jae-myung from the Democratic Party was elected this month to become the country's 21st state head. He has taken issue with the high profitability of financial companies, especially banks.
Suh Yong-gu, an economics professor from Sookmyung Women's University in Seoul, agreed.
"We are entering the 'Era of Big Blur,' where the industry boundaries collapse. Our financial outfits are desperate to grapple with the big trend," Suh said.
"However, Korean financial institutions face strict legal prohibitions in advancing into non-finance sectors. There are questions about whether all the regulations are still necessary in the Era of Big Blur. Regulatory reform will ultimately determine how far they can go," he said.
Professor Lee Eun-hee from Inha University stressed the need to prioritize consumers.
"While certain regulations on financial institutions are essential, the government should reevaluate them when easing those rules clearly enhances consumer convenience," she said.
Beyond their expansion into non-financial sectors, Shinhan and KB have also actively supported professional athletes and sports teams.
KB sponsors Park In-bee, the 2016 Olympic gold medalist in golf, while Shinhan signed a sponsorship deal with Lim Jin-hee, who placed second in the LPGA Rookie of the Year standings in 2024.
Both financial groups also operate teams in the Women's Korean Basketball League, a six-team league they helped establish as founding members in 1998.
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