Expats Emerge as Blue Ocean for Local Banks
By Kim Jae-kyoung
With the aftershock of the global financial crisis waning, Korean banks are turning their eyes abroad to make forays into promising overseas markets to increase their revenue.
At the same time, in the domestic market, local lenders are starting to see foreign residents as gold mines and are developing more services exclusively for expatriates to get the upper hand in the rapidly growing market.
``We see business opportunities in the foreign residents' group as it is a kind of untapped market. We are seeking to upgrade our expat banking service,'' a Woori Bank official said.
There is enough rational in the urgency behind banks' move to enhance expat banking. Banking services for Korean customers are becoming increasingly saturated, leaving little room for expansion.
Against this backdrop, banks have been bolstering their services for foreign customers to capitalize on the rising non-Korean population. The non-Korean population is estimated to have reached 1.1 million in May, around 2 percent of the total population, according to the Ministry of Public Administration and Security.
About 50 percent are foreign workers, while 11.4 percent are married immigrants. Around 40 percent are Chinese-Koreans and 75 percent of the total work with a regular salary and have a visa.
Experts said that major local lenders were starting to change their attitude toward expats as they have seen the opportunity for this niche market growing, with the influx of educated and high-salaried foreigners over the past years.
``Over the past years, banks started to change the most important of all aspects, their attitude,'' said Luis Riestra, CEO of Wise & Wealthy, a firm dedicated to Korea's globalization through overseas market research and foreign investments.
``Expats are literally a gold mine for foreign currency exchange and remittances. The current opportunity is not only big and good, but also growing,'' said Riestra, who has lived in Korea for nine years.
Major Changes Underway
On top of a shift in banks' attitudes, there have been three major changes over the past few years for foreign customers ― tellers, credit cards and international ATM cards.
First of all, most local lenders provide expatriate-only services at a few of their branches.
They have a handful of "designated branches" where usually one or two tellers provide service to foreign customers. Foreigners can find branches with one of these desks and get directions on the banks' Web sites.
Secondly, credit cards are a service foreigners should not miss. Although there is still much room for improvement, foreigners with credit cards are growing at a fast pace.
Some banks, including Korea Exchange Bank, issue credit cards to non-Koreans that allow them to see all the details of their purchases, make cash advances while overseas and manage other features online, all in English.
``Through English-based Internet banking, foreigners can remit funds overseas. (If you) get your card and Internet access set up, you may not have to take a waiting number at a branch ever again,'' Riestra said.
Thirdly, eased regulations has also encouraged local lenders to beef up their expat banking services. For its part, the Financial Supervisory Service (FSS) has eased regulations for foreign account holders.
With the government easing regulations, foreigners now have international ATM access and are able to remit over $10,000 out of the country. They can withdraw cash worth the equivalent of $50,000 in won from ATMs outside of the country.
``In terms of regulations, the FSS has eased up enough (last year) so that there aren't any major obstacles. Allowances on remittance and international use of ATM cards by foreigners are back to normal, (with) improved status, and there should be no further complaints,'' Riestra said.
Banks Enhance Expat Banking
Many local lenders provide expat-only services at some of their major branches staffed with English-speaking service agents, while providing multilingual ATM services.
Woori Bank, the nation's second-largest lender, recently launched a new type of overseas remittance service, which enables recipients or foreign customers' families abroad to withdraw money in their own currencies without paying foreign exchange commissions.
This new service is available in 15 countries ― Taiwan, India, Malaysia, Turkey, Sri Lanka, Israel, Pakistan, Brazil, the Czech Republic, Kazakhstan, Egypt, Peru, Hungary, Jordan and Argentina. The maximum amount of remittance is capped at $100,000.
From this month, the state-funded lender set up a global service desk designed exclusively for non-Koreans at 11 major branches, including its headquarters and its branch at Samsung Town in southern Seoul.
Over the past few years, Korea Exchange Bank (KEB) has introduced a wide range of services exclusively for foreign residents by opening expat banking service centers at key locations and giving international ATM access to their cash abroad through credit cards.
The bank is now running three VIP centers and 15 global desks for foreign customers where their specialists meet foreigners' specific banking needs. Simple banking transactions are also available at 350 branches staffed with English-speaking employees.
The lender offers multilingual ATM services available in 17 languages, including English, Japanese, Chinese, French, German, Spanish, Vietnamese, Thai, Indonesian and Mongolian.
Shinhan Bank opens two branches in Seoul and Ansan during the holidays for foreign customers. The two areas are staffed with employees fluent in English, Chinese and Russian. The lender is running 12 expat-specialized branches in Seoul, Incheon, Ulsan and Mokpo.
SC First Bank, the Korean arm of U.K. banking giant Standard Chartered, offers a foreign customer-tailored service dubbed ``Mosaic Banking'' by running a foreign customer window at its five major branches ― Jongno (main branch), Gwangwhamun, Itaewon, Banposeorae and the Korea Trade Center.
In addition, it provides Mosaic Internet Banking (mosaic.scfirstbank.com), an Internet banking system for foreign customers. Its tele-banking service for foreign customers provides consultation in English.
Tips for Expatriates
Korean banks' expat banking services have made improvements over the past years but they still have a long way to go.
The most urgent service Korean lenders should improve to further satisfy expats here is with credit cards. Experts stressed that banks should simplify the card issuance process for non-Koreans.
"The most urgent item banks keep ignoring despite its high profitability potential is credit cards. These keep being given away at a very slow and ridiculously discriminatory level, making banks no money and fostering bad reputation," Riestra said.
Riestra, who is Korea's first foreign holder of a master's degree in foreign direct investment from KDI School, strongly recommended that foreigners develop a relationship with their branch to get better services and negotiation power.
He advises foreigners to find out where designated branches are for their bank, cluster their financial activity at these places, develop some personal rapport with their regular teller, and take advantage of advanced features and services provided by the most proactive banks.