'Shallow' digital vision from major lenders

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By Lee Min-hyung

Leaders of Korea's major commercial banks are urged to stop hyping up their outwardly grand vision without the courage to “fundamentally change” their digital platforms.

It has been half a year since the so-called big four financial firms ― KB, Shinhan, Woori and Hana ― underlined the digital paradigm shift as their top management priority to brace for in the coronavirus-pushed transactional changes here and abroad.

The major lenders release daily press releases promoting their CEOs' unceasing steps to spearhead digital innovation.

Woori launched its Digital Transformation Division in an organizational reshuffle in July. Woori Financial Group Chairman Son Tae-seung recently decided to commute to the group's second office in Namsan Tower everyday where the lenders' key digital workforce is located.

But from the perspective of customers, it appears that no noticeable change has been made in terms of their digital platforms. Most of the commercial lenders' banking apps have not achieved fundamental progress despite their glib pledge to become digital-first banks. Most of the apps are still slow and crash from time to time while users make transactions.

Most customers do not identify any outstanding change in most of their banking platforms before and after the outbreak of the COVID-19 pandemic early this year.

This is in contrast to the rapid growth of Kakao Bank, the nation's second internet-only bank. The lender operates all the transactions via its mobile app. Users can skip a complex process of certificate-based authentication for the banking app's login, and its platform is speedier. The Kakao Bank app also minimized messy promotional banners, making it easier to use.

For now, there appears to be no match for the app's quality.

As it has been only a few years since Kakao Bank started its service, it focuses mostly on business-to-customer transactions, which is the biggest difference from conventional lenders whose corporate clients make up the bulk of their earnings.

But as Kakao Bank awaits its initial public offering (IPO) as early as the end of this year, existing banking players are keeping a close watch over how big the Kakao affiliate will grow after its listing on the market.

Kakao also said it would pick a lead manager sometime this year for the IPO, in its bid to expand capital for sustainable growth. Kakao Bank's value is estimated to surpass 6 trillion won once it goes public.

Top-tier lenders are expected to keep a close watch over the move, as they could lose more ground to Kakao if case the latter secures more capital and speeds up its expansion into the corporate finance sector.