Credit Card Companies Facing Profitability Decline Seek Business Diversification Through 'Innovative Financial Services' (Comprehensive)

Last Year Financial Services Commission Designated Innovative Financial Services
Shinhan Card Selected for 5 Cases, KB Kookmin and BC Card Each Selected for 3 Cases

[Asia Economy Reporter Ki Ha-young] Credit card companies struggling with deteriorating profitability are seeking new growth opportunities through innovative financial services. These innovative financial services, designated under the Financial Regulation Sandbox according to last year's Special Act on Financial Innovation Support, serve as a key foundation for new revenue streams. Starting from the first half of this year, card companies plan to pilot these services and diversify their businesses to transform for survival.

According to financial authorities and industry sources on the 17th, among the total 77 innovative financial services designated by the Financial Services Commission during the eight months since the sandbox was implemented in April last year, 14 are card company services. By company, Shinhan Card has 5 services, KB Kookmin Card and BC Card have 3 each, and Samsung Card, Hyundai Card, and Hana Card have 1 each.

The most proactive is Shinhan Card. Shinhan Card plans to launch 'Shinhan Face Pay,' a facial recognition payment service, at Hanyang University as early as this month or by next month at the latest. The service is currently in the final stages of preparation for launch. Among the five innovative financial services, credit card-based remittance (My Remittance), credit evaluation for individual business owners, and overseas micro-investment services have been in operation since last year.

My Remittance, which started service on October 1 last year, surpassed a cumulative usage amount of 2.7 billion KRW by the end of last year. The 'Overseas Stock Micro-Investment Service,' conducted jointly with Shinhan Financial Investment, is also progressing smoothly. This service invests spare change or a designated amount linked to card usage into overseas stocks. Domestic funds were applied from September 3 last year, and overseas stocks from November 25 last year. As of the 7th, there are over 6,300 subscribers (more than 2,300 for overseas stock investment), with an investment execution amount of approximately 540 million KRW.

A Shinhan Card official said, "Not only among card companies but across the entire financial sector, the most innovative financial services were selected last year," adding, "We plan to continuously discover new services in line with the financial authorities' intent to promote innovative financial services."

KB Kookmin Card, which had three innovative financial services selected last year, also plans to start operating services within this year. From July, it will provide 100% points accumulation of sales proceeds to merchants with annual sales under 300 million KRW. This service aims to reduce fees for small business owners. Additionally, services such as safe payment for secondhand transactions and specialized credit rating generation for small business owners are being prepared.

BC Card has been designated for services including ▲small remittance between individuals using QR codes ▲specialized credit rating generation for small business owners ▲QR code payment services, and is currently reviewing these services. Hana Card introduced a system that allows payments within the point balance using a check card and plans to launch the service around February to March.

Hyundai Card is preparing a one-stop platform to help individual business owners raise funds by generating credit ratings using non-financial data through partnerships with PG companies, VAN companies, fintech firms, and others, in addition to card merchant data. Samsung Card plans to launch a service around May that allows easy payments by registering accounts through SMS authentication consent during e-commerce use or card issuance.

An industry insider said, "Innovative financial services do not generate immediate profits," but added, "For card companies needing business diversification, this could be a new opportunity."

This content was produced with the assistance of AI translation services.