[1mm Finance Talk] Banks Join Forces with Retailers... Why Are Banks Teaming Up with Retail Companies?

Hana-McDonald’s, Kookmin-GS Retail, Shinhan-Olive Young
Expanding Customer Base Through Collaboration with Distribution Channels
Advantageous for Data Acquisition and Low-Cost Deposit Mobilization

Banks are expanding collaborations with major distribution channels. This move aims to reduce their reliance on the traditional interest margin business model and to broaden their customer base, thereby creating diverse revenue streams. Distribution channels, in particular, have a wide customer base and provide access to various data such as consumer preferences and payment patterns. For traditional banks, which must compete with various platforms like Toss and KakaoBank, these collaborations are seen as an alternative to overcome the limitations of not being platform-based.

According to the financial sector on November 27, Shinhan Bank recently established a partnership with lifestyle distribution channel CJ Olive Young to launch specialized products and services. Based on this partnership, Shinhan Bank plans to introduce a high-interest parking account exclusively for Olive Young members in the first quarter of next year. The account will offer both interest rate benefits and payment rewards.

Hana Bank is also joining forces with global food service brand McDonald's to launch a savings product next month. Depending on the subscription conditions, a total of 60,000 McDonald's coupons and various other benefits will be provided.

KB Kookmin Bank has signed a financial business agreement with GS Retail and plans to launch a co-branded account as early as this year. In addition to parking interest rate benefits, product exchange coupons will be offered based on GS Pay payment performance. The bank also intends to expand customer touchpoints by launching a GS Retail co-branded mobile plan that combines distribution, telecommunications, and financial services.

The background for banks expanding cooperation with non-financial channels is that "embedded finance" has emerged as a core strategy in the banking sector. Embedded finance is a model in which financial services are naturally integrated within a platform. Traditional banks, unlike KakaoBank or Toss, have a weaker platform base, making business expansion difficult. However, collaborating with various distribution channels helps overcome these limitations.

It is also advantageous in terms of data acquisition. Non-bank companies can secure diverse customer data, such as consumer preferences and payment patterns, which banks can then use for targeted marketing, financial product development, and loan screening.

This approach not only expands the customer base but also attracts low-cost deposits. As fewer people visit bank branches, banks are adopting a strategy of entering lifestyle platforms where many customers are gathered to secure customer touchpoints. Olive Young, which recently partnered with Shinhan Bank, has 16.57 million domestic members and 3.36 million global mall members. Previously, KB Kookmin Bank, which launched the "Star Account" in partnership with Starbucks, saw 40% of new customers coming from this initiative, with a significant increase in the 20-30s female demographic, which had been the bank's weakest customer base.

Other commercial banks are also accelerating collaborations with various channels. Previously, KB Kookmin Bank partnered with Samsung Financial Networks to launch the "Monimo KB Daily Interest Account" and with Starbucks to launch the "KB Star Account," both of which sold out. Hana Bank partnered with Naver Pay to launch the "Naver Pay Money Hana Account," selling 500,000 accounts within five months and then expanding sales. Shinhan Bank collaborated with Daiso, and NH Nonghyup Bank partnered with the e-commerce platform Kurly’s simple payment service, Kurly Pay, to launch the "NH Purple Account" offering various benefits. Woori Bank also launched the "CJ PAY Woori Account" in collaboration with CJ OliveNetworks.

An official from the banking sector stated, "Our goal is to seek collaboration opportunities with various channels and deeply integrate financial services into customers' daily lives," adding, "The field with the most customer touchpoints is distribution, so we are discussing a variety of partnership strategies to attract new customers."

This content was produced with the assistance of AI translation services.