DGB Financial Group executives hold a meeting in Zepeto. (DGB Financial Group)
The emergence of the “MZ generation” -- those born in the 1980s and ‘90s -- has brought significant change in South Korea’s financial landscape, pushing its conservative players to navigate uncharted territory in the technological era.
Financial institutions are embracing the technological shift from physical space to digital sphere with big-name bankers experiencing the virtual world via VR headsets and holding executive meetings in “metaverse” online settings.
Financial companies are rolling out financial goods and services that are digitalized and tailored to the MZ generation, as they regard them as their future source of growth.
Woori Card launched “Today’s Debit Card” on June 23 that provides cash back to franchise stores frequently visited by the MZ generation. The franchise includes online shopping and delivery service platforms, and subscription service platforms such as Netflix and Melon.
Hana Bank on Tuesday showcased “Kid to Rich Application,” an app designed for parents to send allowance to their Z generation children. Children can save money and invest in stocks. Parents are given reports that analyze spending habits of their children.
Financial companies are also eyeing “metaverse” channels as a long-term strategy to target younger customers. Metaverses are virtual worlds shared by people in the real world. Zepeto, created by the country’s largest internet company Naver, is a Korean metaverse platform with over 200 million users. About 80 percent of them were aged under 18 as of February.
Hana Bank’s “Kid to Rich Application,” an app for parents and children (Hana Bank)
Testing digital capability of executives, DGB Financial Group held an executive meeting in Zepeto on June 22, with its CEO Kim Tae-ho and other CEOs of five subsidiaries creating their personal avatars resembling their appearances.
“It shows our commitment to adapt to rapidly changing digital culture. We are planning to open a metaverse bank where people can purchase financial goods and services in the near future,” a DGB Financial Group official said.
IBK Securities is already picturing a rosy outlook to build their own metaverse branch. The company signed a memorandum of understanding on June 22 with Meta City Forum. “Customers, mainly in the MZ generation, will be able to trade stocks in the metaverse branch. It will be just like trading stocks through Mobile Trading Systems,” an IBK Securities official said.
Experts say financial companies’ big bets on targeting future key customers stems from Koreans’ remarkable adaptability, and of course, their “ppali ppali” (hurry hurry) DNA.
“South Koreans are highly adaptable to digital change. Since innovative technology makes their lives easier, they do not resist but quickly take it on board,” Hwang Se-un, a senior researcher at Korea Capital Market Institute, said.
“That’s why financial industry, once one of the most conservative industries reluctant to change, is betting big for the future,” he added.
Hwang also said financial companies will win big by investing in younger customers.
“One can argue that strategies targeting the MZ generation is somewhat ineffective to raise profit since the size of their personal assets or income is smaller than the older generation. But the MZ generation will step up as the companies’ main source of revenue one day. So the companies are going all in to win their loyal customers in advance.”
Still, concerns loom over one of the newest digital transformations.
The metaverse can be exposed to security risks such as invasion of privacy and data hacking.
“Of course the metaverse has many challenges, however, it is not impossible to solve them. The financial market is adaptive enough to handle the digital innovation sparked by the metaverse,” Hwang said.
By Byun Hye-Jin (firstname.lastname@example.org