KT's 탈통신 Strategy: Partnering with Shinhan Bank Across 23 Comprehensive Projects

Exchange of 437.5 Billion KRW Shares... Future Growth DX Business Cooperation Partnership
Beyond Fintech Platform, Joint Development of Metaverse, NFT, AI, and Robots

[Asia Economy Reporter Cha Min-young] KT is actively advancing its digital transformation by executing a share swap worth 437.5 billion KRW with Shinhan Bank. This is the first time KT has formed a strategic partnership with a bank at the level of a share swap. As all three major telecom companies emphasize 'beyond telecommunications' and diversify their business portfolios, comprehensive alliances and collaborations are expected to continue across various fields, including fintech platforms.

Building Metaverse Platforms and NFT Marketplaces

Jong-wook Park, President of KT's Management Planning Division (right), and Ok-dong Jin, President of Shinhan Bank (left), are posing for a commemorative photo at the 'KT-Shinhan Bank Strategic Partnership Signing Ceremony' held on the 17th at Shinhan Bank's headquarters in Jung-gu, Seoul. Photo by KT

On the 17th, KT announced that it signed a strategic partnership with Shinhan Bank for future growth DX business cooperation and will proceed with share acquisition. Considering that Shinhan Financial Group is unlisted, the acquisition involves a 2.08% stake, amounting to 437.5 billion KRW. Shinhan Bank also purchased a 5.46% stake in KT previously held by NTT Docomo. Through this cooperation, KT and Shinhan Bank will accelerate 23 joint projects centered on future finance DX and new platform businesses in areas such as artificial intelligence (AI), extended virtual worlds (metaverse), non-fungible tokens (NFT), big data, and robotics.

In the future finance DX sector, KT will leverage its AI capabilities such as data analysis and natural language processing (NLP), combined with Shinhan Bank’s financial data, to create differentiated business models. A representative example is the finance-specialized AICC (AI Contact Center). They will develop AI-based language models and integrate KT’s robotics and media wall technologies into Shinhan Bank’s future-oriented branch, ‘Digilog.’ They will also develop telecommunications and financial services specialized for small business owners. Using KT’s location-based commercial district data, they will develop alternative credit evaluation models. In the future, they plan to establish a joint SI fund (strategic investment fund) to invest in venture companies.

They will also jointly enter new businesses. A metaverse alliance will be established to embed financial infrastructure into KT’s metaverse platform. A differentiated real estate metaverse platform incorporating commercial district information may also emerge. Plans include building an NFT-based digital asset issuance and trading platform. Utilizing KT’s blockchain technology, they will also pursue electronic document business.

Where is ‘Beyond Telecommunications’ Heading?

Analysts suggest that KT’s move to pursue in-depth strategic partnerships in the fintech sector is driven by its strong will to go beyond telecommunications. KT CEO Koo Hyun-mo has emphasized ‘Digico (Digital Platform Company) KT’ as his inaugural message, indicating the need for group restructuring. Since 2016, KT, along with its subsidiary BC Card and partners including Woori Bank and Hanwha Life, formed a KT consortium to obtain the business license for K Bank. Known as ‘Korea’s first internet-only bank,’ K Bank had an unstable start after its launch in 2016 but has since stabilized in the market after about five years. On December 1 last year, it surpassed 7 million subscribers. KT has also collaborated with Woori Financial Group on MyData (personal credit information management) and signed a DX strategic partnership with IBK Industrial Bank.

Other telecom companies are also expanding fintech collaborations. SK Telecom’s ‘Fink,’ created in partnership with Hana Financial Group, is a representative example. Launched in August 2016, Fink is a fintech company with Hana Financial Group and SK Telecom holding 51% and 49% stakes respectively, aiming to enter the MyData business. Last year, SK Telecom also signed a memorandum of understanding (MOU) with Shinhan Bank to combine telecom data with the small business platform ‘SolBiz.’ LG Uplus collaborates with Shinhan Bank and CJ OliveNetworks on the MyData business. KB Kookmin Bank’s MVNO ‘Liiv M’ service was also launched using LG Uplus’s network for the first time. Although Liiv M will expand to KT’s network this year, it significantly contributed to increasing LG Uplus’s network share.

The reason for increasing collaboration between telecom and financial companies is that fintech is the intersection where challenges from both industries meet. Emerging new players like KakaoBank, started by Kakao, and Toss Bank, launched by Toss, have created a sensation among the MZ generation, putting pressure on major banks. With the core telecom business stagnating, diversification of portfolios is urgent for telecom companies, making such proposals highly attractive.

Park Jong-wook, Head of KT’s Management Planning Division, said, “We will showcase a financial DX model based on synergy with the country’s top financial group and the largest digital platform company,” adding, “We will open a new paradigm of DX growth with Shinhan Bank through customer-centric differentiated digital convergence services.”

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