To strengthen its global operations, Shinhan Bank is accelerating the development and marketing of products targeting local customers, including the launch of digital loan products overseas.
According to Shinhan Bank on March 12, Shinhan Bank Indonesia is partnering with local fintech platform company Dana to introduce digital loan products. After signing a business agreement this month, the products are expected to be launched in April. This marks the first time Shinhan Bank is introducing non-face-to-face loan products in collaboration with a platform company in Indonesia this year.
The electronic payment company Dana ranks third in the Indonesian Buy Now, Pay Later (BNPL) industry. It is registered and approved by the Indonesian Financial Services Authority with an active customer base of around 837,000 users.
The newly introduced digital loan product, called “Channeling Loan,” is a structure where Shinhan Bank Indonesia provides loans to individuals who use the Dana platform. Users of the Dana platform’s payment services can apply for loans directly through the application. Initially, Dana conducts the first round of assessment, after which the application undergoes a second assessment by Shinhan Bank Indonesia.
Customers who successfully pass this process can receive the loan amount provided by Shinhan Bank Indonesia through the Dana application. Dana has included payment insurance from the local Indonesian insurance company Sindar Mas in this product to prepare for situations such as defaults lasting over 60 days. Dana opens an escrow account in the name of Sinar Mas with Shinhan Bank Indonesia and reserves 40 percent of the outstanding loan balance in the account.
Last year, digital lending, including platform loans, accounted for US$2.6 billion, or 30 percent, of Shinhan Bank’s retail loan balance of US$8.91 billion. As a result, the bank plans to expand its digital division, which has strengths in cost reduction and convenience. Shinhan Bank Vietnam is pursuing new digital businesses such as credit card acquiring and online and offline payment services, while SBJ Bank in Japan is currently conducting tests to digitize mortgage loans, enabling remote processing without the need for face-to-face interactions.