Korean banks enter non-financial services to respond to big tech’s expansion

KB Kookmin Bank headquarters in Seoul. [Courtesy of KB Kookmin Bank]

KB Kookmin Bank will start providing mobile guidance services for the National Tax Service from as early as next month.

The consortium of KB Kookmin Bank, Shinhan Card Co., and Naver Corp. won the bid for this project in April, beating Kakaopay Corp., which had been providing the service every year since 2019. KB Kookmin Bank plans to deliver various tax notifications and application instructions, including comprehensive income tax declarations, through notifications on users’ digital wallet on the bank’s banking application.

Commercial banks are increasingly expanding into non-financial services, diversifying into areas such as telecommunications, delivery services, real estate, travel, mobility, education, and sports.

The move towards non-financial services among banks is driven by the desire to reduce dependency on interest-based businesses and transform themselves into popular platforms that customers want or need to access multiple times a day.

According to industry sources on Wednesday, Hana Financial Group’s lifestyle finance platform app, “Hana Money,” is rapidly gaining popularity as an essential platform for overseas travel. Its specialized overseas travel card product linked to the app offers benefits such as no fees for currency exchanges, making it popular among the younger generation in their 20s and 30s. Hana Bank’s expertise in foreign exchange transactions plays a significant role in this success.

Hana Bank’s Travelog card. [Courtesy of Hana Bank]

KB Kookmin Bank is also intensively expanding its real estate services, following its foray into the budget phone market. Recently, the bank launched personalized real estate service on the group’s KB Real Estate app. By registering their residential apartment complex and unit number, users can easily view the market price and actual transaction prices for leasing and buying.

KB Kookmin Bank plans to introduce a rental property service next month, specifically catering to lease tenants concerned about high lease deposit ratios compared to the property value and potential fraudulent deals. This new feature will help tenants identify safe transactions, and provide access Seoul Housing & Communities Corp.’s public lease information. KB Kookmin Bank envisions further enhancing the real estate service by adding features such as MyData and non-face-to-face home mortgage loans, with the aim of creating a comprehensive personal real estate management platform.

Shinhan Bank’s delivery app is also thriving. Since its launch one year ago, the app has surpassed 1.7 million users and, as of the end of June, recorded 2.4 million users. The number of affiliated merchants also grew nearly fivefold to 115,000 in just one year. Shinhan Bank placed the delivery service in a prominent location on their banking app.

Furthermore, banks are actively moving to enter the rapidly expanding digital wallet market. KB Kookmin Bank recently added services that provide the fastest routes to Incheon International Airport and check-in counters when users enter their flight numbers into their app. The bank also introduced an automatic car inspection service and a popular pet registration certificate service.

Banks are turning to non-financial services for various reasons, with one of the main factors being tech giants like Apple Inc., Naver, and Kakao Corp. venturing into financial services leveraging their platform dominance. Banks find it necessary to enter the non-financial services sector effectively in response to this trend among big tech.

Banks’ such efforts are leading to some fruitful outcomes. KB Financial Group is the only financial institution that has been publicly disclosing the monthly active user (MAU) data for its non-financial platforms since the first quarter of this year. By the end of June, the MAU for the non-financial platforms reached 2.26 million, a 21 percent increase from the previous quarter’s 1.87 million. “Banks must now extend their focus from financial to non-financial services to offer a comprehensive customer-centric platform,” said one official from the financial group.