SNS-based Universal Banking
Naver is holding digital hands with SBI, the largest online financial company in Japan, to accelerate the convergence between finance and information technology. The evolution of social network banking is picking up speed in the form of Bank Wallet Kakao, which is a KakaoTalk messenger service available from next month allowing up to 100,000 won to be remitted a day, and the remittance service of the Naver Band messenger.
Under the circumstances, experts point out that Korean banks, insurers, and securities companies need to mull over new ways of overseas business with major SNS providers in Korea and Japan working together with leading Japanese financial companies to launch similar services soon.
Until now, commercial banks and financial firms have entered overseas markets by setting up their own offices, acquiring or merging with local firms, and establishing joint ventures with them. This type of market penetration has a positive aspect in that the scope of the target customers can be expanded to locals from companies in overseas businesses. Though, experts mention this analog way of doing business is waning.
The collaboration between Naver and SBI Securities implies that banking-IT convergence knows no limits. At present, financial companies are focusing on a functional combination in sales activities and product development. Products of banks, insurers, and securities firms are available via the same channels, and mobile technology is tearing down the boundary between them. The advent of SNS-based universal banking is around the corner.
The government is also hinting that the concept of an Internet bank will become real in the near future. In fact, such banks are already on a rapid growth track in the United States, Japan, and other advanced economies.
Specifically, in Japan, Internet banks have recorded an average annual growth rate of 32 percent since 2000 based on the active participation by major IT companies and banks. One of the examples is Rakuten Bank. Established in 2001, it has total assets of 1.105 trillion yen (US$10.77 billion) and posted a net profit of 7.4 billion yen (US$72 million) last year. Rakuten is a leading electronic payment service provider.
American Internet banks, likewise, have grown by 19 percent on yearly average since 2000, and their total assets amounted to US$458.2 billion at the end of March this year. Their profitability has improved, too. They accounted for 5.3 percent of the total operating profits of all American commercial banks in 2013. The examples include Charles Schwab Bank, E*Trade Bank, and Ally Bank.