[Financial Digital New Normal] Jo Yong-byeong "Digital Leadership is a CEO's Qualification" Vital to DT

Sol·Paypan and Others Establish Chairman-Direct 'Loonshot Organization' for New Platform Construction
Core Strategy 'Shinhan Neo Project'... Supporting New Industries and Creating Ecosystems
Strengthening Financial Evaluation to Enhance Credibility... Digital Channels Grow 39% Annually

[Asia Economy Reporter Jo Kang-wook] "If we cannot mobilize all the group's capabilities and resources to open a new path called digital, Shinhan's future will no longer exist."

This is what Cho Yong-byeong, Chairman of Shinhan Financial Group (photo), said during a non-face-to-face broadcast for employees commemorating the group's 19th anniversary last September. Chairman Cho diagnosed that "the COVID-19 pandemic, which has swept the world, has completely changed the standards of the world that were previously taken for granted."

Chairman-Direct 'Loonshot Organization' Established... Dedicated Team for New Platform

About a month later, on the 6th of last month, Chairman Cho established a chairman-direct 'Loonshot Organization' to build a new digital platform. This is separate from the existing mobile applications (apps) Sol (Shinhan Bank) and Shinhan PayFAN (Shinhan Card) operated by subsidiaries, creating a new platform while simultaneously forming a dedicated team to discover groundbreaking ideas.

The blueprint for Chairman Cho's digital innovation began with the '2020 Smart Project' established after his inauguration in 2017. Starting this year with the second phase, he has been focusing on digital transformation (DT) reforms, such as introducing a 'Mentor System' where CEOs of each group company directly manage core digital technologies. At the end of July, he publicly announced plans to use 'digital leadership' as a key qualification in evaluating CEOs and executives, showing how much Chairman Cho is committed to DT.

Digital Management Strategy 'Shinhan N.E.O Project', a New Deal Policy for Finance

The core of Shinhan Financial's digital management strategy is the 'Shinhan N.E.O (New Economy Opportunity) Project.' This project is a New Deal policy for finance with three main directions: 'supporting new growth industries,' 'leading new digital finance,' and 'creating a new growth ecosystem.' In particular, to lead new digital finance, it is taking the lead in activating the financial data exchange and is introducing various financial services using artificial intelligence (AI) in each group company. The project is also operating to discover digital startups and create a new ecosystem combining industry and finance.

Especially, the digital technology mentor system, where each company's CEO is responsible for core digital technologies to strengthen technological capabilities and discover collaborative projects at the group level by technology, is evaluated to have been successfully established. The future core financial technologies under mentorship include AI, big data, cloud, blockchain, and healthcare businesses.

AI is considered the most advanced among domestic financial holding companies. In September last year, Shinhan Financial established 'Shinhan AI,' the first AI-specialized subsidiary in the financial sector, securing differentiated AI capabilities through launching AI investment products and developing risk management systems. The two investment products launched in January recorded sales of about 65.9 billion KRW, showing steady and favorable performance by minimizing volatility even in the recent unstable financial market due to COVID-19.

Shinhan Financial is also prominent in the big data industry. Shinhan Bank was the first in the banking sector to start 'data-based advisory and sales services,' providing regional income, expenditure, and financial asset information by utilizing transaction data of 25 million customers and 300 million monthly deposit and withdrawal transactions. Shinhan Card is also pushing to sell data to overseas financial institutions for the first time in Korea.

Creating an ecosystem for new growth is the area where Shinhan Financial puts the most effort. This is because innovation can only be sustainable when an ecosystem is established. To respond to regulatory environment changes, Shinhan Financial created the group's first joint open API platform, 'Shinhan Open API Market,' in August 2018, collaborating with various lifestyle service companies. It also operates 'Shinhan Future's Lab,' the largest accelerator program among domestic financial groups, nurturing 195 startups over six years since 2015 and investing a total of 31.1 billion KRW, leading the startup ecosystem construction.

Digital Channels Deliver Tangible Results... Operating Profit Grows Over 39% Annually

Shinhan Financial's DT efforts are not just declarations but bring tangible results. Shinhan Financial is the only domestic financial group to announce operating profits through digital platforms. In the second half of this year, it is establishing enhanced financial evaluation standards to measure financial performance to increase market trust in digital performance results. The digital channel operating profit, which recorded 368.8 billion KRW annually in 2018, achieved 358.5 billion KRW in just the first half of this year as a result of company-wide efforts, showing an annual growth rate of 39.4%.

Chairman Cho emphasized, "Shinhan is currently at a crossroads deciding whether to leap forward based on past success or decline amid change," adding, "We must completely change business models, work processes, and evaluation systems for organizations and individuals centered on digital."

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