With a new year stretching ahead, the chiefs of Korea’s top-tier banking groups underlined the urgent need to restore customers’ trust, defining the latest market situation as a “crisis.”
While pointing to external factors such as slow economic growth and low interest rates, they also referred to disputed sales of derivatives-linked funds that led to extensive customer damages last year.
(Clockwise from top left) Shinhan Financial Group Chairman Cho Yong-byoung, KB Financial Group Chairman Yoon Jong-kyoo, Woori Bank CEO Sohn Tae-seung and Hana Financial Group Chairman Kim Jung-tai.
“Shinhan should look beyond market ranking and aim for first class in the true sense of the term,” Shinhan Financial Group Chairman Cho Yong-byoung said Thursday at the group’s yearly kickoff meeting at its headquarters.
“No. 1 (in industry ranking) is a mere relative term, but first class indicates absolute trust from customers and society.”
Despite Chairman Cho’s ongoing trial over his alleged involvement in a recruiting corruption scandal, Shinhan Financial maintained its leading position in the market throughout 2019.
As of the third quarter last year, the group’s flagship Shinhan Bank logged 1.98 trillion won ($1.7 billion) in accumulated net profit, up 3.1 percent from a year earlier and once again outrunning rival KB Kookmin Bank.
The chief also urged employees to embrace the fast changes of the financial industry and to think out of the box, suggesting public-private partnership or cooperation with up-and-rising financial technology players.
“To support such moves, (the group) will steadily look out for merger and acquisition opportunities, here and abroad, within and outside the financial sector,” Cho said.
Yoon Jong-kyoo, chairman of KB Financial Group, also touched on the group’s M&A strategy, vowing to add speed to its nonbanking business enhancement.
“For the sake of the group’s business portfolio, we shall leave the door open to various M&A possibilities,” said Yoon in his New Year’s address at the group’s Yeouido headquarters.
“While approaching (the issue) in a cautious way, we will take swift and drastic actions when the occasion offers.”
He also laid out a two-track strategy, demanding that the group’s banking sector to review its cost structure and the nonbanking businesses to focus on finding new growth momentum.
Kim Jung-tai, chairman and chief executive officer of Hana Financial Group, said the banking industry needs to reset itself in the face of innovative technology challenges.
“Due to technological progress, even coffee companies such as Starbucks are now rising as potential competitors for banks,” Kim said.
“The next 10 years will be nothing like the past 10 years. Now is the time to completely reset everything from business models to detailed processes.”
In partnership with Microsoft and other companies, Starbucks is currently working with cryptocurrency trading platform Bakkt to develop consumer applications for digital assets, seeking to carry out the first test within the first half of this year.
Woori Financial Group Chairman Sohn Tae-seung started off his new year by paying visit to the grave of Joseon era Emperor Gojong, emphasizing the group’s position in the nation’s financial development.
The history of Woori Bank traces back to Daehan Cheon-il Bank, established in 1899 with funds from the Joseon imperial family.
“Now is the time to challenge for change and innovation, before change forces itself upon us,” he said.
“The top priority for Woori Financial this year is to regain the customers’ trust.”
KEB Hana Bank and Woori Bank are facing the prolonged consequences of the derivatives-linked funds fiasco.
Last month, the Financial Supervisory Service delivered notice to both banks, including plausible penalties upon their key executive members involved. Both banks earlier vowed to fully abide by the FSS’ arbitration on damage compensation in an effort to minimize the impact upon management.
By Bae Hyun-jung (firstname.lastname@example.org)