According to domestic banks that have entered the Indian market, six South Korean banks are currently operating 13 branches in India. Shinhan Bank has six offices, while Woori Bank has three, KEB Hana Bank, Industrial Bank of Korea (IBK) and KB Kookmin Bank have one each. The offices are located in various areas ranging from New Delhi to Mumbai, Chennai and Gurgaon.
In November 2016, the Government of India announced to demonetise the rupee 500 (US$7.65 or 8,775 won) and rupee 1000 (US$15.31 or 17,550 won) bank notes, which accounted for 86 percent of the total amount of currency circulation, and the issuance of new rupee 500 and rupee 2000 banknotes in exchange for the old banknotes, carrying out currency reform. The government claimed that the action would curtail the shadow economy and crack down on the use of illicit and counterfeit cash to fund illegal activity and terrorism.
And in less than a year, there is a distinct change. More and more people, mostly younger ones, are voluntarily using financial services, such as online banking and electronic wallet, now.
South Korean banks which have entered the Indian market say that a growing population that use financial services is a golden opportunity for them to seek successful localization in the Indian market. As India is the underprivileged financial country in where 40 percent of the population have no financial accounts, there is a possibility of reversing.
Lee Hae-gwang, charge d'affaires at the Korean Embassy in New Delhi who is well acquainted with Indian affairs, regards “awareness improvement” as the first requirement for domestic banks to make a successful landing in the local market. He said the banks should know about Indian in order to survive the competition with local banks and large foreign banks such as Citibank and Deutsche Bank.
Lee said, “It is clearly an opportunity that an increasing number of people are using financial services after Prime Minister Narendra Modi has taken office. However, South Korean banks will miss this opportunity when they don’t have enough brand awareness and fail to win trust from customers. In a bid to attract local customers and successfully settle in the market, the banks should raise their awareness so that everyone knows about them.”
Due to characteristics of the financial industry, it is hard to improve both brand awareness and trust in a short period of time. This is why South Korean banks are planning to gradually increasing the crossing point with Indian instead of rushing out. They believe that it is better to naturally and slowly be part of society for the long-term success, rather than forcing them to accept unknown foreign banks.
Industry sources expect that South Korean banks’ expertise in finance and sincerity will be a strong weapon in the Indian market. The domestic banks’ characteristics that provide simple and fast services can be an edge in the Indian financial market in where it takes long and is complicated to open a bank account.
Their experience and expertise in non-face-to-face channels that have accumulated in the domestic market is another game changer. Woori Bank plans to release “Mobi Bank,” which is a banking app specialized to the Indian market, by the end of this year, while NH NongHyup Bank will also launch “All One Bank” specialized to the local market.