Rendering of KB Financial Group`s private banking center in Apgujeong, Seoul. (KB Financial Group)
With government restrictions on loans getting tighter and financial technology firms expanding their presence, South Korean banks are turning to their wealthiest clients and their asset management as a survival tactic this year.
NongHyup Bank CEO Kwon Joon-hak pledged Monday to adopt a new model that connects customers with wealth managers through its own digital channel. He said he plans to provide professional and quality services to customers using its digital wealth management channel, in this year’s five-day intracompany wealth management seminar launched Monday.
Following a massive reshuffle in the beginning of the year, Hana Bank established a special team on wealth management. The new wealth management team absorbed the bank’s trust and pension fund division along with other parts that could boost its capacity.
KB Kookmin Bank in December launched an online wealth management platform that allows customers to take tests to find the type of investment that is most beneficial for them. The test provides 16 different types of portfolios for the user to build in collaboration with KB Kookmin’s wealth management services.
In line with their efforts to boost their wealth management services, banks have been opening special brick-and-mortar for private banking and asset management only, while shutting down other offline businesses. Woori Bank on Jan.3 opened its exclusive branch for its clients with over 3 billion won ($2.5 million) in assets called Two Chairs Exclusive Signature Center in Gangnam. The branch marks the third of its offline services designed to cater to its top-tier clients. Woori assigned 13 of some 20 private bankers it hired from Citibank Korea to the new Gangnam center, it said in a recent announcement.
Korean commercial banks, like Woori, have hired more than 50 private bankers who had worked for Citibank Korea and recently left after the bank decided to withdraw its retail banking business in phases, recent reports said. KB and Standard Chartered Korea each reportedly hired around 15, while Hana hired three.
KB Kookmin is currently building a 7-story building in the middle of the affluent Gangnam area to open a new private banking center in July. It plans to offer a consulting on inheritance and each client will get a team consisted of a private banker, tax accountant and a lawyer.
Commercial banks have also taken a step toward developing wealth management services for cryptocurrency, though they remain cautious in dealing with the virtual asset under financial authorities’ watchful eye. KB Kookmin, NongHyup and Shinhan are major traditional institutions that have recently revealed their plans to support crypto custody. As crypto custody solutions, they would be third-party providers of storage and security services for cryptocurrencies.
The traditional banks’ efforts to digitize and expand their wealth management services come as the number of South Koreans with assets over 1 billion won have been growing. According to a report compiled by KB Financial Group, the number of Koreans with assets over 1 billion won grew 10.9 percent on-year to 393,000 as of end-2020, accounting for 0.76 percent of the nation’s 50 million population.
Banks have been scurrying to diversify their revenue sources as the government has placed stricter caps on the amount lenders can extend to borrowers. On top of that, Big Tech and fintech firms including Naver and Kakao have been attracting retail customers with their tech-savvy and round-the-clock services, adding to competition in the market.