This is a part of a series of interviews and analyses of South Korea’s top bankers, policymakers and investors leading the financial industry here. This is the sixth installment. -- Ed.
Shinhan Financial Group is in talks with a handful of e-commerce companies over a potential acquisition or strategic investment to create an online commerce space where consumers can shop for financial services like any other retail products.
“The limitation of mobile finance apps is that they can’t generate traffic. Customers use the apps only to make transactions, not to shop financial products,” Sunny Yi, chief digital officer of Shinhan Financial Group, said in an interview with The Korea Herald.
“To obtain large volume of data and learn more about consumption patterns, we have to either forge a partnership or buy stakes in high traffic e-commerce sites,” he said, adding that negotiations are underway. Shinhan plans to acquire platforms that have monthly active users between 1 to 5 million.
The investment will be financed by a 300 billion won ($268 million) fund created by affiliates of Shinhan Financial Group including Shinhan Bank, Shinhan Card, Shinhan Investment and Shinhan Life, in March.
“It is the first time for the group to make such a strategic investment. There are a lot to discuss and consider but I’m excited to play a leading role in this deal making process,” Yi said.
Other than securing an IT platform through acquisition deals, Yi said the company also wants to work with platform giants such as food delivery platform Baedal Minjok, online secondhand marketplaces Danggeun Market and Bungaejangter as well as Yanolja, the country’s largest accommodation and leisure activity booking platform operator.
As CDO, he is searching how financial companies can play a role in targeting the MZ generation, he said. Such vision has led him to pay attention to the secondhand luxury goods market here.
The MZ generation, referring to people born between the 1980s and 2010s, accounts for 70 percent of the Korean luxury goods market, he explained. But the cash-strapped group often tend to buy used high-end designer clothes or handbags and resell them through online resale marketplaces, he said.
“One of the biggest issues in the market is authentication of luxury goods. That’s what we are keeping an eye on … we can think about offering solution using blockchain and other technologies to resolve the problem,” he said.
“Banks need to move further into the daily lives of customers, providing assistance before, during and after the financial transaction,” he said.
Other services that the company could offer include an escrow payment system that provides an additional layer of trust when buying and selling luxury items as well as a small personal loan service for buyers running short of cash, Yi added.
Yi also looked inward when striving for digital transformation since he took up his current positions, both as CDO and CEO of subsidiary Shinhan DS in January 2020. He joined Shinhan in 2019 after serving as the regional head of Bain & Company and AT Kearney.
Starting this year, digital business performance that the group and affiliated firms’ chief executives have made will be reflected in their key performance indicators to encourage them to adopt new technologies in order to deliver better value to their customers.
In April, the group conducted a digital capability test on 250 executives via Shinhan SCOOL check, an online platform designed to evaluate and enhance the skills, knowledge and understanding of digital transformation including a web-based coding course.
“Those changes show our willingness to adopt digital transformation by action, not by words,” Yi said.
Another fresh attempt is set to take place on Thursday when Shinhan DS marks its 30-year anniversary. Due to the COVID-19 pandemic, the company will hold an online ceremony like they did last year, but have decided to take it one step further.
Company executives will use Zepeto, a Korean app that went viral among MZ generation users by using facial recognition to create virtual avatars, to deliver speeches to employees.
“At the end of the day, you have to understand your target customers and their main areas of concern. You’ve got to see and experience what they do,” he said.
By Park Han-na (email@example.com