Digital literacy core factor for promotion at Shinhan

Shinhan Financial Group Chairman Cho Yong-byoung speaks in a seminar at its training center on Jan. 2. Yonhap

By Lee Min-hyung

Financial firms worldwide are promoting their visions for digital transformation to brace for the post-coronavirus era.

Korean financial players are also embracing the change, claiming a new era of digitization will offer fresh chances for them to seek a breakthrough amid the structural slowdown in the financial industry.

Despite their years-long hype to follow the vision, most of the leading financial holding firms have yet to bring visible results in their digital drives.

But the mood is shifting rapidly in financial circles here, with the COVID-19 pandemic creating a heightened sense of crisis by paralyzing traditional economic activities here and abroad.

Shinhan Financial Group, one of the nation's biggest financial holding firms along with KB Financial Group, is particularly eager to embrace digital transformation in a timely manner.

“We are going to evaluate the digital literacy of our affiliates for the latter half of 2020, as part of a test operation before deciding to continue the plan next year,” a spokesman at Shinhan said.

Under the drive, the group will test the specific digital capabilities of its subsidiaries, according to the financial holding firm.

“After a six-month pilot test, we will make the final decision sometime at the end of the year over whether to keep testing them,” the official said.

Shinhan Financial Group Chairman Cho Yong-byoung is standing at the center of the group's digital transformation. He has urged staff not to be afraid of making mistakes.

In a recent meeting with staff from the group's artificial intelligence (AI) research unit, Shinhan AI, he discussed the firm's AI-powered market warning system ― which predicts potential risks in the financial market by analyzing more than 6.5 million scenarios. The group established Shinhan AI in 2019, becoming the first among the nation's financial holding firms to do so.

To help the banking group become a serious digitally agile player, Shinhan started what it calls the “digital guardian system” under which leaders from each of its affiliates will be responsible for developing digital business with the focus on one core emerging technology.

For instance, Shinhan Bank CEO Jin Ok-dong will handle AI and keep seeking potential group-wide synergy through the technology. Shinhan Card CEO Lim Young-jin will take a similar role in the area of big data. Shinhan Investment will lead the group's cloud computing business.

Orange Life Insurance, which Shinhan acquired in 2019, will handle blockchain, and Shinhan Life Insurance will focus on healthcare.

Expanding digital foothold in insurance

With portfolio diversification becoming more significant for financial players amid virus-sparked uncertainties, Shinhan is also seeking to stabilize its revenue structures by enhancing non-banking sectors ― such as insurance.

It considers setting up a digital non-life insurance affiliate. Despite Shinhan's leading status in the domestic banking industry, the group's lack of a non-life insurance subsidiary has been cited as one weak point, especially compared with its rival, KB.

Coupled with its digital drive, the group said it will expand its footprint in the non-life insurance industry. The spokesman said a specific timeline for the drive has yet to be confirmed.

“It is true we leave open all the possibilities for our expansion into the non-life insurance business, including the potential launch of the digital-only insurer,” the Shinhan official said. “But details over our plan for the digital insurance business have not been confirmed,” he said. Earlier thoughts are Shinhan may launch a digital non-life insurer on its own without acquiring existing players.

“We may push for mergers and acquisitions or launch an independent subsidiary,” the official said.