Banks find new biz opportunity on big tech home turf

Shinhan Bank is the latest major lender to set foot in the delivery app business. Korea Times file

By Yi Whan-woo

Commercial banks are capitalizing on mobile apps to advance into the on-demand delivery service business, the home turf of local big-tech companies that have been using their digital prowess as platform operators to muscle into a wide range of industries.

The measure taken by the banks, according to industry sources, is noteworthy, as it hints that the brick-and-mortar lenders may not be leaders in digital technology, but can still become influential platform operators through accumulated expertise in their respective fields.

Shinhan Bank will be the latest to join the campaign, with its domestically developed food delivery app starting a trial run, Wednesday. Some other banks, such as Woori, KB Kookmin and Nonghyup, have already been operating apps in the fields of courier services and flower deliveries, among others.

The app-based food delivery market is scaled at 12 trillion won ($10 billion), but consumer demand still outstrips supply.

Shinhan spent more than 10 billion won to create the app. It will be available in six districts in Seoul: Gangnam, Seocho, Songpa, Mapo, Gwangnjin and Gwanak.

“Spending such a big amount of money in a non-financial sector is rare and therefore worth paying attention to,” a market observer said, adding that it would cost less to develop the market's leading apps, such as Baemin and Yogiyo.

The app is designed to offer financial benefits to clients with accounts at Shinhan Bank, many of whom are self-employed.

For instance, the rate of commission will be 2 percent, which is the lowest in the market.

Shinhan Bank assessed the company's app as “a fresh attempt on the path to innovative finance.”

It said that the app is not intended to be a major source of income, but rather a source of big data for the creation of relevant financial products in the long term.

“We will continue to provide services that embrace different groups of customers,” it added.

In August, Woori Bank launched a courier service in cooperation with ParcelMedia.

KB Kookmin Bank partnered with Yogiyo to have its clients order food using the bank's app.

Nonghyup Bank sells flowers on its app, in cooperation with the Flower Farmers Association, one of its clients.