The Three National Policy Banks Launch Speed Race in 'Digital Transformation' (Comprehensive)

Published 12 May.2021 15:03(KST)

(From left) Seoul Yeouido Korea Eximbank, Seoul Euljiro IBK Industrial Bank of Korea, Seoul Yeouido KDB Industrial Bank headquarters.

[Asia Economy Reporter Jin-ho Kim] The buzzword in the financial sector this year is undoubtedly 'digital transformation.' Last year, during the COVID-19 crisis, the policy banks that played a crucial role as a breakwater for the Korean economy have now set digital transformation as a core goal for the second half of this year, driven by a sense of urgency that it "can no longer be postponed." The digital transformation of policy banks, which mainly handle policy and corporate finance, is analyzed as a preemptive strategy to prepare for the 'post-COVID' era.

According to the financial sector on the 12th, the management keyword for the second half of the year for the three policy banks?KDB Industrial Bank, Korea Eximbank, and IBK Industrial Bank of Korea?is summarized as 'digital transformation.' These banks, which had focused all efforts last year to prevent mass corporate bankruptcies amid the COVID-19 crisis, have recently begun shifting their management focus to digital transformation, which they had set as a goal.

The most proactive is Korea Eximbank. President Visit Kyu is leading the charge personally, determined to make this year the inaugural year of the genuine 'Digital Eximbank.' To this end, it will start building a data-based automated screening system within the second half of the year, the first among policy financial institutions. Additionally, to secure data competitiveness, it is pushing forward with the goal of completing a data center at the Talent Development Institute in Yongin, Gyeonggi Province, by 2024. The data center is one of President Visit’s key projects and will serve as Eximbank’s digital infrastructure for more than 30 years.

An Eximbank official said, "We expect a revolutionary improvement in financial accessibility for export-oriented SMEs, and credit screening will become more sophisticated based on digital and data."

IBK Industrial Bank is also pushing to expand its digital ecosystem centered on President Yoon Jong-won. The Digital Innovation Committee, chaired directly by President Yoon, is at the heart of IBK’s digital transformation. The committee was launched earlier this year to inject digital DNA into the bank and is driving changes across all areas, including customer engagement, business process and service development, human capabilities, and organizational culture.

IBK’s efforts to expand its digital ecosystem are active in two main areas: digital transformation of core banking fields such as corporate screening and customer consultation, and partnerships with big tech and fintech companies. It is also concurrently working to train 1,000 digital core talents by 2023. An IBK official said, "We plan to build a technology-centered ecosystem through collaboration with big tech and fintech firms and expanding data partnerships with external companies," adding, "This will be the foundation for sustainable growth."

KDB Industrial Bank’s digital transformation efforts began as early as 2019. This was thanks to Chairman Lee Dong-geol’s swift decision to move away from the traditional restructuring-focused business framework toward future innovative growth. To promote a bank-wide digital strategy, the IT headquarters was renamed the IDT headquarters, and the digital promotion department within the headquarters was reorganized. The bank has also promoted digitalization across corporate finance operations and signed business agreements for joint development and sales of financial and non-financial products and services with Viva Republica, the operator of Toss.

Given the project finance-oriented nature of their work, digitalization has been slower and more challenging for policy banks compared to general commercial banks. However, their efforts toward 'digital transformation' are regarded as an inevitable trend of the times. Especially with the post-COVID era approaching, all three banks are reported to have high internal expectations for meeting the non-face-to-face demand from corporate clients and others in finance.

A policy bank official said, "There is great interest not only because of customer demand for non-face-to-face services but also due to the significant effects of reducing manpower and costs internally," adding, "We expect that digital transformation, which had been postponed, will gain full momentum from the second half of this year as the COVID-19 response winds down."