Internet banks boost competitive edge with 'group accounts'

gettyimagesbank

By Lee Yeon-woo

To find a breakthrough in the market dominated by commercial banks, internet banks are increasingly focusing on “group accounts” which can be owned communally by several members. The products allow internet banks to not only secure a monthly cash inflow but also attract more customers, both young and old.

A group account is run jointly by designated group members, any of whom can manage and view details of the account's balance, deposit and withdrawal status. First released by KakaoBank in 2018, the account type has been popular among those who need to handle expenses transparently, for instance, in cases of traveling together or hobby groups.

Group accounts is almost the only market in which internet banks have succeeded to take the high ground over the five major commercial banks here ― KB Kookmin, Shinhan, Hana, Woori and NH NongHyup.

An exemplary Image of a KakaoBank group account with the name “Let's go on a trip” / Courtesy of KakaoBank

So far, KakaoBank has been dominating the market by combining its service with Korea's dominant mobile messenger app KakaoTalk, which has more than 13.5 million account users. TossBank has attracted more than 230,000 users since launching its own group account last month. K bank also unveiled plans to release its own group account in the first half of this year.

In contrast, NH NongHyup is the only one among the top five banks to offer group accounts at the moment, while Shinhan, Hana and Woori all terminated theirs due to sluggish performance.

To maintain the lead, internet banks are coming up with various offers such as subsidies for group activities and cashback.

“Once opened, group accounts guarantee stable cash inflow, as multiple customers collect money in the account each month,” an official from the internet bank said.

Internet banks' advantage of offering online-friendly services is noted as their biggest competitive edge. It's easier for customers to invite group members to the account, and to send group notices via social media within the apps.

These accounts also serve as a gateway to secure new customers, appealing to older generations who have multiple occasions to get together but have been unfamiliar with the concept of internet banks.

According to Hana Institute of Finance, 51.3 percent of Generation X (born between 1966 and 1980) and 47.1 percent of the baby boomers (born in 1965 and before) who opened new accounts between June 2021 and June 2022 chose internet banks.