Card Companies Expand Personal Business CB Operations... Targeting 6 Million Potential Customers

Shinhan Card Applies for Full Approval of Personal Business CB
Competition in CB Market by Card Companies and Big Tech Expected to Intensify in Second Half

[Asia Economy Reporter Ki Ha-young] As credit card companies, facing deteriorating profitability, diversify their businesses, competition is expected to intensify to secure 6 million individual business owners as potential customers by actively expanding the individual business owner credit evaluation (CB) business.

According to the industry on the 9th, Shinhan Card applied for the full license for individual business owner CB to financial authorities at the end of last month. This came just two weeks after obtaining the preliminary license for individual business owner CB from the Financial Services Commission, the first in the financial sector. Once the full license is granted, it is expected to launch the CB business in earnest.

Since 2019, Shinhan Card has operated the individual business owner CB service "MyCredit" through the Financial Services Commission's innovative financial services. It has provided credit evaluation services to external financial companies such as internet banks, and recently introduced loan products up to 50 million KRW using MyCredit for Yanolja partner stores struggling due to COVID-19.

If Shinhan Card obtains the full license, the individual business owner CB market is expected to expand significantly in the second half of this year, in line with the government's policy to revitalize the mid-interest rate market. Besides credit card companies, internet-only banks like Kakao Bank and fintech companies like Naver Financial have also entered the CB service market linked to self-employed loans, making competition fierce.

The self-employed loan market, exceeding 800 trillion KRW, is a representative example. As financial authorities emphasize the activation of mid-interest rate loans, demand for CB targeting self-employed individuals is also increasing. According to the Bank of Korea, as of the end of March, self-employed loans amounted to 831.8 trillion KRW.

Since 2019, credit card companies have operated pilot projects for individual business owner CB through innovative financial services. Besides Shinhan Card, KB Kookmin Card and BC Card have launched services such as "CreditTree" and "BizCredit," respectively. They have also applied for preliminary licenses for individual business owner CB from financial authorities and are expected to receive approvals sequentially. Other card companies are also reviewing related services.

Until now, individual business owners have received relatively low credit ratings due to lack of information in the existing credit evaluation system and have been marginalized in the financial loan market. The card industry expects to provide accurate credit evaluations for individual business owners using big data owned by card companies, such as merchant sales data, thereby expanding the loan market and creating demand for consulting. As credit evaluation becomes more sophisticated, loan interest rates for individual business owners may also decrease, and card companies are approaching individual business owner CB from the perspective of strengthening financial support for vulnerable groups.

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