[The Editors' Verdict]Banks Have Changed

"Recently, overall, it seems that the paradigm of the financial industry has changed. Until now, companies operated with the mindset of 'just making money,' but going forward, they must benefit all stakeholders and proceed harmoniously. I will lead the group with greater attention to social responsibility." (Yang Jong-hee, KB Financial Group Chairman nominee, June 11)

"Righteous management requires patience. Do not be anxious trying to catch up with competitors' performance; patience is needed to follow the righteous path. We may need to endure a period of patience for the next 2 to 3 years." (Jin Ok-dong, Shinhan Financial Group Chairman, June 1)

Banks are changing. Until a few years ago, bank holding company chairmen competed fiercely through excessive sales efforts, achieving record-high net profits and using those results as a stepping stone for reappointment. Consumer protection was neglected. The consequences were the Lime scandal, overseas interest rate-linked derivative-linked fund (DLF) scandal, and the Optimus scandal.

Chairman Jin reportedly made three major requests to all Shinhan Financial Group affiliates. First, do not cause scandals such as the Lime incident or embezzlement cases. Second, do not cause inconvenience or dissatisfaction to customers. Third, pursue reasonable profits. In the past, banks tried to sell unnecessary products for performance and persuaded customers to subscribe to high-risk products for fee income. Branches competed due to relative evaluation, pushing for higher performance even after meeting targets. Now, they want to stop that.

In actual sales sites, there is still confusion because this approach is very different from the previous sales methods. "Is it really okay not to push for excessive performance?" "What if the performance gap with competitors becomes too large?"

Another change is the effort to differentiate. Korean banks became very similar during the 2000s. Previously, Woori Bank had a large corporate finance share, Kookmin Bank had much more retail finance, and Foreign Exchange Bank, merged into Hana Bank, had strengths in foreign exchange.

But now, except for brand image, there is little difference. The ratio of corporate finance to personal finance is about 50-50 for all. While this may be desirable from an asset portfolio perspective, it does not seem to help competitiveness or the development of the banking sector.

Woori Bank held a strategy presentation on June 7 to "rebuild the corporate finance powerhouse," announcing plans to raise its corporate loan market share from 4th place currently to 2nd by 2025 and 1st by 2027. They plan to expand corporate loans based on the strength of being the main creditor bank for 11 out of 38 major corporate debt groups.

Hana Bank launched the "Travelog" service, a prepaid card concept for overseas travel, in July last year. Travelog, which has become an essential service for overseas travel, had 2.14 million members and a cumulative foreign exchange amount exceeding 590 billion KRW as of the end of last month. Due to difficulties in linking overseas payment networks, foreign exchange infrastructure, and partnerships with overseas ATM operators, currently only Hana Bank, which has strengths in foreign exchange, offers this service among banks.

It is uncertain how much banks will achieve these visions and goals and how well they will pursue righteous management or the paradigm shift in the financial industry. Some view these announcements as inevitable given the current situations each bank faces. Still, I want to believe there is sincerity for now. I hope this trust will not be broken.

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