Financial firms brace for post-pandemic world
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CEOs seek to build speed, agility in digitization
By Anna J. Park
As COVID-19 is expected to drastically change the landscapes of the economy and financial industry, Korea's financial sector has begun to prepare itself for the post-pandemic era.
Leaders of the country's financial regulator and leading financial companies have urged their staffs to embrace the changes the pandemic will bring about in the near future. Innovation in digitized business is the shared key in their messages.
“COVID-19 will accelerate the Fourth Industrial Revolution, such as the expansion of non-contact transactions, big data and AI-based technology,” Financial Services Commission (FSC) Chairman Eun Sung-soo said earlier this month. “Financial institutions and companies need to prepare themselves for financial innovations in post-coronavirus times.”
Shinhan Bank CEO Jin Ok-dong called on his staff to take bold actions and come up with concrete strategies.
“The spread of COVID-19 will change the standards of the finance business, especially in the areas of client services, channel operation and risk management,” he said during an in-house broadcast earlier this month.
Kyobo Life CEO Shin Chang-jae also recently urged its employees to prepare for the digital economy, saying, “We need to stop thinking that things would go back to the way they were after COVID-19 is over. Customers accustomed to digital trends won't go back to previous consumption patterns.”
Virtual contact with clients
Led by their CEOs' initiatives, major banks are ramping up efforts to strengthen their digitization processes.
Shinhan Bank has digitized a complete process of receiving bank loans since the end of last month. Woori Bank has recently launched a special taskforce to strengthen its digital service competitiveness.
SC Bank Korea also launched its first “Wealth Care Web Seminar,” for which online registration is possible. Financial experts provide investment information and global trends at the web seminar, as the bank aims to reach further clients using the digital platform.
Insurance companies are also proactively adapting themselves to embrace the new trend of strengthened digitization amid the coronavirus pandemic.
However, given that over 98 percent of new insurance clients are recruited through direct meetings with insurance planners, as of November last year, insurance firms' digitization efforts are more focused on assessment and payment of claims and related counseling with clients, rather than on recruiting itself.
Hanwha Life has introduced an AI-based system that enables real-time assessment of claims, while DB Insurance plans to provide 24-hour counseling to clients through AI Roboteller within this year.
Korea's first internet-only insurer Carrot General Insurance is also gaining traction in their business as the firm attracts many clients in their 20s and 30s with its innovative approach in devising insurance products that meet the needs of the young generation.
Currently, two other digital-only insurers are in their way to launch their businesses within this year. An unnamed market insider pointed out that the COVID-19 is accelerating a complete restructuring of the insurance market towards the digital-based insurance industry.
“Online-only insurers will occupy a bigger share of the market with their unique strengths in suggesting innovative and flexible products to clients, which can be a big plus in the insurance market that used to be very traditional and conservative,” he explained.
Agility matters
Kim Jae-woo, analyst at Samsung Securities, emphasized that financial firms' agile responses will determine future paths of their differentiated performances.
“As we experience this contactless service trend, a fundamental change is asked for in virtually every domain of the financial businesses, ranging from sales channel operation, product development to business running,” he explained. “How each firm responds to this trend will result in significant differences in their future growth and profits.”
A recent report published by HI Investment & Securities also stressed that pandemic-led digital transformation will bring about innovations in business models in almost every sector.
Companies that have been passive in this move are particularly expected to brace themselves to conduct thorough transformation towards digitization, as they try not to lag behind in following changed lifestyles that affect overall industries.