By Kim Jae-won
Staff Reporter
Local credit card firms still vividly remember the painful situation back in the early 2000s, when the credit card crisis swept through the nation. Many big firms then suffered liquidity problem. LG Card, which was then a dominant player with more than 10 million customers, became the biggest victim, with the firm going bankrupt in 2003 and merging into Shinhan Card in 2007.
However, they learned lessons from the experience. Domestic companies have since strengthened risk management. They have made efforts to develop new markets with new products. Thanks to such efforts, the plastic card industry is now maintaining sustainable growth, but many challenges are lying ahead.
Now, several issues are waiting for the local industry, which can be summarized by three keywords ― convergence, spinoff, and competition.
Convergence with other industries, such as telecommunications and retail, is an important trend in the industry. Hana SK Card, founded by Hana Card and SK Telecom, plans to launch a new type of mobile phone equipped with credit card functions this year.
The plan by SK Telecom and Hana Card is to enable users to pay with their phones and also receive information on locations of specific venues, such as shopping centers, restaurants and other businesses.
Other players are also preparing new products. For example, Samsung Card plans to upgrade payment processes adding new technologies including mobile payment. It is preparing various products based on such technology, and those products will be released later this year.
``We are preparing new products equipped with mobile payment functions,'' a Samsung Card employee said.
Meanwhile, Lotte Card sets its eyes on retail services, with which the mother group has a strong point.
``Spin offs'' will continue in the industry this year. Hana Card and Nonghyup Card were spun off, respectively from Hana Bank and NH Bank last year, and Kookmin Bank is mulling over separating its credit card arm this year.
``We are considering spinning off credit our card business, and establishing an independent corporation from KB,'' said Choi In-kyu, executive vice president of the lender at a press conference at a restaurant in Yeouido in Seoul last December.
Shinhan Card, spun off from Shinhan Bank in June 2002, has been independent since then. Shinhan said professionalism is a result of the spinoff.
``We can set policy and run our business by ourselves. When we were under the bank, it was easy to be affected by the banking business,'' Yoon Woo-seok, a manager at Shinhan Card, said.
Competition among major firms will continue to be fierce. Hyundai Card will challenge Samsung Card to take over second place in the market, while Shinhan Card will be eager to stay on top.
Hyundai edged Samsung in terms of market share with 13.1 percent in 2009. The latecomer also increased its total assets for the last two years based on strong sales of Hyundai Motor, its sister automaker. Hyundai's total assets were 4.5 trillion won in 2007, and spiked to 5.6 trillion won a year later, reaching 7.1 trillion won in 2009, up 27.1 percent compared to the previous year.
However, Samsung is still ahead with 10.1 trillion won in terms of total assets in 2009. By net profit, Samsung marked 603.8 billion won last year, much more than Hyundai, which reported 213 billion won over the same period.