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Bank CEOs in Korea pick big tech as top 2021 challenge

By Dec 08, 2020 (Gmt+09:00)

Bank CEOs in Korea pick big tech as top 2021 challenge

Chief executives of banks operating in South Korea have picked the emergence of big technology companies and fintech startups in the credit market as the biggest threat to their business next year, citing accelerated government efforts to lower entry barriers to the banking industry, according to a survey by The Korea Economic Daily.

In a poll of CEOs of 15 banks in the country on Dec. 7, 11 respondents said they will boost investment in digital services in 2021 to keep pace with rapid digital transformation in the financial services industry.

But they saw 2021 earnings remain little changed from this year’s levels as they plan just as heavy provisioning against loan losses as they did this year, saying the economic fallout of COVID-19 will likely linger until the end of next year.
Graphics by Jerry Lee
Graphics by Jerry Lee
"Fintech startups will further expand their foothold, with big technology companies and non-banking online platforms continuing their foray into various business areas, including payment and settlement services,” said Woori Bank CEO Kwon Kwang-seok.

The country's two major internet-only banks – K Bank and KakaoBank, both founded in 2017 – also participated in the survey.

Fintech and big tech platforms have expanded their lending around the world. In South Korea, fintech is one of the key areas the government has been actively promoting to spur innovation and fuel competition in the financial services industry.

Under the government-led “MyData” business plan, financial institutions will be required to provide customers’ personal information to a third party approved by a MyData business operator. The country’s top financial watchdog is working to give MyData business licenses to banks and non-banking institutions, for which revised relevant laws took effect in August of this year.

Big tech credit has shown particularly rapid growth in China, Japan, Korea and Southeast Asia, as well as some countries in Africa and Latin America, BIS said in its working papers published in September of this year. In 2019, fintech and big tech credit reached nearly $800 billion globally, according to BIS.


In the face of competition from alternative credit providers such as big tech, the bank CEOs said they will bolster non-interest income businesses such as asset management and private banking.

Additionally, eight respondents said they will continue to close, or combine as many branches next year as they did this year, with another four CEOs planning to close more branches than they did this year. None of them foresee an increase in the number of branches in 2021.

“Now that almost all banking businesses are available on mobile platforms, we need to innovate our face-to-face businesses,” one of the CEOs told the KED survey.

* The following are key comments from surveyed CEOs of banks in South Korea:

- Hana Bank's Chi Seong-kyu: “Digital transformation in the financial services industry has been accelerating since COVID-19 struck. It is unavoidable to scale back branch operations."

- NongHyup Bank’s Son Byung-hwan: “We will aggressively adopt digital services across our asset management business, ranging from customer protection for product sales and non-contact customer service.”

- Shinhan Bank’s Jin Ok-dong: “We will further develop our AI-based credit scoring model to upgrade risk management.”

- Kookmin Bank’s Hur Yin: “We will preemptively set aside loan-loss provisioning. We also need to grow investment banking and other non-interest income businesses.”

- Woori Bank's Kwon Kwang-seok: “Profit margins will inevitably deteriorate due to intense competition.”

- Standard Chartered Korea’s Park Jong-bok: “We will roll out ESG funds that invest in ESG sectors.”

Write to Daehun Kim, So-Ram Jung and Hyun-A Oh at

Yeonhee Kim edited this article.

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