Banks brace for 'next normal' amid pandemic

Financial firms embracing cloud computing, AI for digital workspace

By Lee Min-hyung

Digital transformation is no longer a cliched goal for small retail business operators or large companies in every corner of every industry.

This has become a must for market players to embrace rapidly, as the COVID-19 pandemic is forcing new paradigms on working environments; and the shift can be seen in emerging realities such as “work-from-home” or “contactless transaction.”

Most industries have considered digitization as something crucial but vague, so most of them continued delaying the process of converting information into a digital format.

The financial industry has been particularly cited as one of the latecomers in terms of embracing the transformation due to the conservative nature of the regulation-ridden sector.

But banks and other financial firms ― such as credit card companies, life and non-life insurers and fintech startups ― have now identified digitization as the most crucial task for their sustainable growth in the post-coronavirus world.

One noteworthy change is the rise of digital workspaces among financial firms. With companies across the world realizing the importance of running platforms that allow their employees to work from home, banks and financial players are also rapidly jumping on the bandwagon by establishing their own digital workspaces to brace for a possible second or third wave of viral infections and potential challenges from another pandemic outbreak.

Shinhan Bank, the nation's largest lender by annual net profits, is in particular going all-out to establish a more agile telecommuting environment.

The bank recently started building a digital-driven work environment called the virtual desktop infrastructure (VDI).

It was tough for banks and other financial firms to embrace remote digital work systems, due to concerns over potential leaking of the private information of their customers. The financial authorities are also keeping a close watch for any hacking threats in the financial sector, and monitoring how market players keep to tight regulatory guidelines.

But banks including Shinhan believe they can no longer stick to the office-based work system under which their business operations would be disrupted if an employee was confirmed to have been infected forcing them to halt business operations.

Shinhan is now searching for business partners to help in establishing a more secure VDI telecommuting system.

Woori Financial Group, the fourth-largest financial holding firm by market capitalization, is also speeding up its drive to build what it calls a “paperless conferencing system” which will allow employees and executives from its affiliates to take part in online conferences from any location.

To achieve its own digital transformation vision, the group is upgrading its internal cloud computing system to enable employees to access and revise a greater range of documents online.

Financial players are also expanding their partnerships with tech companies to achieve a faster digital transformation.

Samsung SDS, which recently signed a mega IT system management contract with the Korea Development Bank, predicts that only financial firms embracing more state-of-the-art emerging technologies will be able to survive in this digital paradigm shift.

The IT systems affiliate of Samsung Group is offering a range of such technologies ― using artificial intelligence (AI) and blockchain ― to local financial firms.

“For instance, our AI system enables banks to analyze customers' datasets automatically, and can recommend customized financial products to them,” a spokesman for Samsung SDS said.

“We also offer an AI-based character recognition system called Artificial Intelligence Character Recognition (AICR) to commercial lenders here,” the official said.

KB Financial Group, which is regarded as the nation's most agile financial player in terms of embracing the digital shift, is seeking to build a group-wide cloud platform.

The platform, tentatively named KB Cloud Design Center, will stand at the center of the group's digital transformation. The group plans to run a pilot test on the platform before the end of the year. The group plans to launch its cloud platform in 2024, as part of its mid- to long-term “cloud first” management strategy.

KB Kookmin Bank, the group's cash-cow, is establishing its next-generation digital ecosystem under the project name “The K Project” through which the lender hopes to transform itself into a more digitally-friendly banking player through focusing on AI, blockchain and cloud computing.