Financial Authorities Warn Sangsangin Savings Bank of "33% Special Promotion Gambling and Excessive Competition Concerns" (Comprehensive)

Sangsangin Savings Bank Launches Special Savings Account with 33.2% Annual Interest
Industry and Authorities Express "Concerns Over Excessive Competition" Due to High Rates

[Asia Economy Reporter Song Seung-seop] It has been understood that financial authorities have expressed concerns about the special promotion of a 33.2% high-interest savings product launched by SangSangIn Savings Bank. Although the promotion poses no legal issues, there is a risk that it could be perceived as gambling and may fuel excessive competition. The savings bank industry also acknowledges that while it can effectively secure deposit customers and gain promotional benefits, there are worries about marketing overheating.

According to the financial sector on the 17th, SangSangIn Savings Bank announced the launch of a special fixed savings product offering an annual interest rate of up to 33.2%. This rate is the highest among special promotion products ever released in the industry. Typically, high-interest special promotion products distributed in the savings bank sector are formed around the 5% range, and even those require strict and complex conditions. Considering the current interest rate hike period, this rate is about six times higher.

The interest rate is provided to 32 people selected by lottery. The selection is done by spinning a roulette once a day. Customers can deposit from 10,000 KRW up to 1,000,000 KRW monthly for six months. Additionally, 150 more people are selected to receive a 3.32% interest rate benefit on savings and fixed deposits respectively. The fixed deposit has the same maturity but allows deposits up to 5,000,000 KRW. All events can be participated in only once per day, and additional participation is restricted upon winning.

The financial authorities’ working department reviewed the details of the launch of this high-level special promotion product and reportedly conveyed verbal concerns on the same day. The method of offering exceptional benefits through a lottery could be perceived as gambling, and if such marketing becomes a trend, it could lead to overheated competition within the industry.

An official from the Financial Supervisory Service explained, “Providing benefits through a lottery is not legally problematic,” but added, “We conveyed concerns regarding the special savings promotion to SangSangIn Savings Bank as a precaution.” They further stated, “The message was that it might encourage gambling and could potentially fuel excessive competition.”

"Even without legal issues, it may trigger excessive competition"

Within the industry, voices are emerging that marketing efforts to gain an advantage in the customer acquisition battle could ignite. A savings bank official said, “Offering high interest benefits through a lottery can achieve high promotional effects at low cost, but there are side effects,” adding, “As individual companies increasingly raise the level of prizes and benefits, the entire industry could experience overheating, which might prompt regulatory intervention.”

The financial authorities have intervened in various ways whenever signs of overheating appeared in the financial sector. At the end of last month, KB Kookmin Bank and Woori Bank canceled the Genesis car prizes offered as part of their MyData service pre-registration event. This was interpreted as a response to the financial authorities’ message to avoid excessive marketing during the MyData business process.

In 2010, a controversy over excessive competition with high interest rates arose when Shinhan Bank offered a 7.5% interest rate while being selected as a contractor for Korea Hydro & Nuclear Power. The rate was about 1 percentage point higher than other banks and more than twice the deposit interest rate at the time.

Meanwhile, SangSangIn Savings Bank explained that the event was conducted as a customer appreciation initiative rather than a business operation. A representative from SangSangIn Savings Bank said, “We are sharing profits within our capacity,” and added, “Since it is not an unlimited acceptance method, there is no problem.”

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