Credit card companies diversify in response to challenges

Shinhan Card’s train reservation services [Courtesy of Shinhan Card]

South Korean credit card companies are expanding their financial platform businesses as well as data-driven services, in a bid for new revenue streams as performance in their payment services falls thanks to prolonged high-interest rates and an increase in delinquency rates.

According to industry data as of Sunday, seven credit card companies are currently operating comprehensive financial platforms, including Shinhan Card Co., KB Kookmin Card Co., Samsung Card Co., Lotte Card Co., Woori Card Co., HanaCard Co., and BC Card Co.

Alongside key services such as payment, banking, and asset management, the platforms also offer non-financial day-to-day services including electronic certificates, goods sales, and content services. For the shopping sector, which is closely associated with payments, the companies are making pointed efforts to attract users by expanding the range of channel-sale products available on the platform, including household essentials as well as travel and entertainment products. They also offer direct goods deals at the lowest prices online or equivalent affordable prices.

Shinhan Card recently introduced train reservation services on its own platform and was the first in the financial sector to provide mobile easy payment services. KB Kookmin Card sells household essentials, travel products, and concert tickets, and offers services such as early morning delivery and live shopping. “Selling a variety of items such as gift certificates and travel products is believed to be profitable,” an unnamed industry insider said.

According to data from mobile big data tracker IGAWorks, the monthly active users (MAU) of comprehensive financial platforms operated by major domestic credit card companies increased from earlier in 2023. KB Kookmin Card’s platform had the largest increase, with user numbers rising to 7,311,212 in November 2023 from 6,163,849 in January, an increase of almost 1.15 million users.

Credit card companies are also actively seeking data businesses. While there were only 3,793 registered data products by credit card companies as of May 2023, the number has nearly trebled in the past seven months. In response to growing competition, all eight major credit card companies obtained authorization for MyData Business, which provides integrated personal credit information management, with Shinhan Card, Samsung Card, and BC Card also designated as “data agencies” in July.

Shinhan Card analyses market and consumption behavior by combining non-financial information such as communication and shopping with consumption data and provides consulting services based on this data analyses. Since launching the country’s first private data dam in 2021, Shinhan Card has expanded its cooperation with institutions such as the Korea Financial Telecommunications & Clearings Institute and LG Electronics Inc. Samsung Card has also launched its own private data dam, with plans to develop and sell data products in various industries as well as participate in government and public sector data businesses. BC Card is also building curation models based on consumption and movement data by combining them with data from industries such as tourism and health. BC Card also plans to launch alternative credit rating services aimed at inclusive financial services.

As large information and technology corporations also enter the payment business, competition among the financial platforms is getting fierce. Experts believe that data businesses and their accompanying payment platforms could be a new revenue stream.