Competition heats up in card industry
By Kim Jae-won
Competition in the domestic credit card industry is heating up because major players are increasing efforts to occupy the runner-up slot by deploying aggressive marketing strategies.
KB Kookmin, Samsung and Hyundai have long been engaged in a battle to become the second-largest player in the domestic market with each holding a market share of 12 to 13 percent. Shinhan Card is the dominant leader with a 21.6 percent share in December.
KB Kookmin rekindled the competition by releasing its new card which allows cardholders to integrate and use all mileage and benefits from different cards. Customers have the freedom to pick and choose benefits based on their consumption patterns.
Since its launch in March, KB Kookmin has gathered more than 200,000 customers for the new card, doubling the company’s annual target of 100,000. The success of this has inspired copycat products from rivals.
Samsung’s so-called “number” series has also been popular with an issuance of 1 million in nine months since its launch in November thanks to its tailored benefits for customers. For instance, No. 3, the most popular product in the series, gives additional discounts at amusement parks and restaurants. Cardholders of No. 7 can enjoy bigger discounts on weekend spending.
Other credit card issuers, such as Korea Exchange Bank (KEB) and Hana-SK Card, are gearing up to overtake them. In particular, KEB’s 2X Card, which doubles discounts for customers after six months of spending, has been adopted by more than 213,000 customers in two months.
KEB CEO Yun Yong-ro seeks to expand the lender’s retail customer base with the card. KEB is the leading lender in foreign exchange and trade finance but lags behind its rivals in the retail banking sector.
Hana-SK has drawn more than 400,000 customers with its new Club SK Card in three months. It offers competitive discounts for customers of SK Telecom and SK Energy, the two main businesses of SK Group. Hana-SK is a joint business entity between Hana Financial Group and SK.
Hyundai, which has led the industry with its creative marketing, is changing its strategy to a wait-and-see mode to weather the uncertain economic situations. The credit card subsidiary of Hyundai Motor Group is focusing on reducing costs and finding new revenue sources which can support traditional businesses.
“There is a limit to expanding credit card sales. We should establish a more efficient management system as well as creating new business models to lead the industry,” said a company spokesman.