Value context and insight. lkm@koreatimes.co.kr
Card firms, insurers expand ties with tech firms
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By Lee Kyung-min
By Lee Kyung-min
Card firms and insurers are rushing to expand partnership with platform services providers and technology companies, particularly fintech firms, in a bid to find new growth engines amid fast-declining profitability, industry sources said Monday.
This move is in line with their efforts to redefine themselves as platform companies by adopting diverse marketing channels with user-friendly functions, crucial components to mapping out long-term business strategies amid fast-changing customer demands.
The often-neglected, low-tier subsidiaries of Korea's major financial groups are particularly pressured to improve business performances in the latter half of 2019, following a worse-than-expected earnings shock in the first half.
Shinhan Card has been seeking numerous joint projects with global popular online platform companies including Amazon, Skyscanner, Paypal, Hotels.com and Uber, a move to help become a digital “hub” whereby quality services offered by high-profile global entities are easily found.
Among the global business partners of the industry leader is Skyscanner, an Edinburgh-based travel fare aggregator website and travel metasearch engine.
The firm, based in Scotland with over 1,200 carriers worldwide, has expanded the service by maximizing cooperation with Shinhan Pay FAN, the card firm's online platform, mostly by easy, fast search and booking service.
Not only flight tickets but also other options on lodging and public transportation fares overseas can be viewed and paid there, saving customers time and money.
This is in line with “Connect more, create the most,” a new business motto of Shinhan Card CEO Lim Young-jin.
Over the past few months, Woori Card has rolled out a number of new cards that offer various cash rewards and mileage services in cooperation with its partner firms.
They include a department store Galleria, run by Hanwha Group, and CJ OliveNetworks, mostly known to the public by health and beauty store Olive Young.
The card firm says launching such cards helps reduce marketing fees and increase the number of new customers.
Hyundai Card is in talks to boost ties with fintech firms in Israel, mostly concerning fintech sector developments.
Shinhan Life and Kyobo Life have been seeking to strengthen platforms via cooperation with budding fintechs.
“Cooperation with fintechs is the best and most guaranteed way for us to push forward with innovation, a much needed quality to stay in the game and continue generating profit,” a Kyobo official said.
Life insurance group AIA Group Limited, better known as AIA, has seen its Korean branch launch a walk tracker app, a joint project with SK Telecom, Korea's largest mobile carrier and SK C&C, an IT consulting arm of SK Group.
Over 1 million subscribers have downloaded the app as of April, and the largest public listed pan-Asian life insurance group has essentially secured about 23 million SK Telecom customers.
AIA says one of its health plans gives discounts to users who have stayed fit by following guidelines on every day food choices and workout routines.
“Many people in the financial industry are under mounting pressure to abandon the complacency associated with the conventional mindset that long limited our role largely by what firm we work for,” an industry official said.
“Now, we are all required to become digitally savvy entities regardless of the traditional identity of the firm.”
The nation's eight card firms have posted a combined net profit of 957.8 billion won ($791.5 million) in the first six months of 2019.
While the figure is only a 0.9 percent decrease from a year earlier, their profitability is largely expected to worsen due to the card transaction fee cut early this year.
Major local life insurers including Hanwha and NongHyup saw their net profits for the first half of 2019 halved from a year earlier.