"Why Order Jjajangmyeon from Banks When Coupang Exists?" Banks Targeting the Big Tech Market

Banks Accelerate Entry into Everyday Life Services
Significantly Lower Fees and Focus on Data
"Banks Should Also Be Allowed Ancillary Non-Financial Services"

[Asia Economy Reporter Kiho Sung] Lee Sang-jin (36, pseudonym), an office worker living in Gwanak-gu, Seoul, is contemplating whether to switch the food delivery application (app) he frequently used. He heard that he could use the Seoul Love Gift Certificate, which offers a 10% discount, on Shinhan Bank’s food delivery app ‘Ttaenggyeoyo,’ his main bank. Lee said, "The commission fee for order mediation is also low, so the guilt I felt towards restaurant owners every time I ordered delivery will likely decrease," adding, "If it opens, I will try it, and if I am satisfied, I will use it instead of Baedal Minjok or Coupang."

As banks actively enter lifestyle-oriented services, the market landscape is shaking up. Banks, which had been overshadowed by big tech companies, are now challenging the platform market, their home turf. Banks seem to be focusing on data collection in the era of MyData (personal credit information management) while keeping commissions as low as possible. However, how to resolve the still-persistent regulations is expected to be a key issue.

According to the financial sector on the 21st, Shinhan Bank will launch its self-developed delivery app ‘Ttaenggyeoyo’ starting from the 22nd of this month. Six districts in Seoul?Gangnam, Seocho, Songpa, Mapo, Gwangjin, and Gwanak?will be the initial targets. By the end of next year, they plan to secure about 80,000 affiliated stores across Seoul and Gyeonggi Province. The order mediation commission fee is 2%, significantly lower than the existing delivery apps’ 6?15%. They also do not charge advertising or store entry fees.

This is not the first time banks have entered the delivery market. Woori Bank added a convenience store delivery service called ‘My Convenience Store’ to its app. KB Kookmin Bank has a ‘Yogiyo’ banner on its own app. Hana Bank is planning a subscription product combining convenience store items and financial products in partnership with CU, and NH Nonghyup Bank operates ‘All One Flower,’ a banking app that allows purchasing and delivery of products from the Korea Flower Cooperative.

Commercial banks are launching lifestyle-oriented service products one after another to secure customer data and complete a ‘lifestyle finance platform.’ Through this, they intend to engage in a head-to-head competition with big tech companies that have encroached on the financial sector. With the rise of the MyData era, the importance of data has increased, making it attractive to collect various data such as payments and sales from users and self-employed individuals. Because they focus on data collection, consumers and self-employed individuals can benefit financially.

However, it is uncertain whether the lifestyle-oriented services launched by banks will continue. Bank delivery apps are using the ‘regulatory sandbox,’ which temporarily exempts various financial regulations for innovative services. ‘Ttaenggyeoyo’ was designated as an innovative financial service in December last year, enabling its launch, but after December next year, it must receive an extension of validity from financial authorities.

A banking industry official emphasized, "Banks should be allowed to engage in ancillary businesses outside of financial services just like big tech companies," adding, "Since big tech companies are allowed to enter finance, there is no reason not to permit banks to operate platform businesses for consumer convenience."

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