Amid slowing momentum in the banking industry and rising competition from fintech players, major financial groups are looking to break away from the status quo and design a new business paradigm.
In an attempt to deviate from the conventional banking-focused mindset, most have chosen to fuel in-house ventures this year, encouraging the units to experiment with digital transformation in order to come up with new business ideas.
The latest example is the state-run Industrial Bank of Korea, which in late January kicked off two in-house venture teams: Creative is in charge of innovative advertising content, and IBK Bobae is dedicated to pioneering new business road maps.
The two new units were modeled on the top two groups to emerge from a pilot project, Community of Practice, which ran throughout last year and involved 167 study groups, according to bank representatives.
“The two in-house ventures will be provided with full support this year, ranging from budget, human resources and infrastructure,” a bank representative said.
“The idea is to create an autonomous environment in which innovative talents may freely display their capacities, without being bound by the conventional business protocol or stereotypes.”
Woori Bank, which recently marked a new start as Woori Financial Group, recently undertook a more exceptional action.
Accepting a proposal from one of its in-house ventures, InnoThink, the bank decided to provide title sponsorship for League of Legends Champions Korea, the local league of LOL, the world’s most popular online game. It was the first time that a major bank listed its name as an official sponsor of an e-sports event.
The bank also operates a venture called Dream Cell, based on an idea that came about through an in-house idea contest last year.
Realizing the inconvenience of the conventional take-a-number system for customers in banks, the team developed a mobile app called Smart Hub. The app allows customers to check in real time how long the lines are and how long they will have to wait before deciding which branch to visit.
“The system is currently undergoing an internal test and will be commercialized in the near future,” said a bank representative.
Hana Financial Group in January launched its C&D Factory -- short for Connect and Development -- as part of its venture-incubating program. Shinhan Bank and KB Kookmin Bank, the top two rivals in the industry, also renewed their efforts to expand their training courses and incubation programs for innovative digital ventures.
An in-house venture unit of Shinhan Bank. (Shinhan Bank)
“The banking industry has long grown accustomed to a hierarchical culture and a salary step system,” said a representative of one of the major banks.
“It is inevitable that banks should spin off separate organizations, such as in-house ventures, as conventional structures are unfit for innovation.”
The banker, however, also admitted that the latest venture boom among local banks was a belated move, especially considering the fast-paced industrial changes in the ICT and manufacturing sectors.
“Besides the conservative business mood, government regulations also acted as hurdles for banks to make unprecedented actions,” the banker said.
But facing the drastic convergence of the financial and ICT sectors in recent years, the banking industry is now running out of time.
“In-house ventures may fail to commercialize their ideas, but their attempts will deliver positive stimulus to employees in the long-term perspective,” said a representative of Shinhan Bank.