Woori Bank started to sell the ISA products, joining forces with a savings bank named, “ISA Deposits and Installment Savings with Savings Bank” for the first time as a nationwide commercial bank in Korea.
On May 3, the bank put on its shelf 23 ISA savings and deposit products in a tie up with the Association of Savings Banks. In June, the bank also put on the market ISA installment savings products after signing cooperative tie-up agreements with a number of savings banks, including Yekaram, JT, Koryo and three others.
The maturities for the ISA installment savings products is three years paying from 2.6 percent to 3.4 percent per year. The maturities for ISA deposit products are from six months to 3 years, which is higher than those of nationwide commercial banks by 0.7 percent on average.
Woori Bank officials said Woori Bank is the only bank that offers the ISA deposit products in cooperation with the savings banks, good for customers seeking higher earnings for their funds. The bank said it will continue to make efforts to diversify ISA products, including ISA bonds with repurchase conditions.
The bank has also been providing “Robo Advisor” services to customers through Wee Bank, an Internet and mobile banking service by the name of Robot Alpha, which is an online asset management service. A computer algorithm analyses customers’ data and financial Big Data, and advises on financial products for investment for individual customers. Robot Alpha comes in three types, including ISA type, general investment type and retirement fund planning.
Woori Bank officials said the bank will formally put on the market the official version of the Robot Alpha to begin providing advisory services on investments, including general investment targets to retirement life planning. Woori Bank has also decided to provide tailor-made strategic products for the sake of ISA customers, in cooperation with Uwe Bergermann, a global investment asset management firm.
Korean banks are striving to draw in more individual savings accounts (ISAs) customers, after the retail investment service was opened up to them, amid growing concerns over overheated competition in the local market.
After the country's top financial regulator allowed lenders to tap into a sector that had previously been restricted only to securities firms, banks have been considering ISAs as a new revenue stream for their businesses, engaging in various promotional marketing activities.
An ISA is a type of savings account where tax is not collected from interest earned or gains from investment up to a certain value, allowing account holders to accumulate more money. Brokerage houses will start offering the accounts on March 14 and banks will follow late that month. More than 100 trillion won is expected to be poured into the ISA market over the next five years.
"Since ISA customers can open only one account per person and the service has a required term of five years, banks are doing their best to attract more customers in the early stage," said an official at KB Kookmin Bank. The bank set its marketing budget at 500 million won ($404,000) to attract new ISA customers.
The number of people who have signed up for newly offered individual savings account products surpassed 1 million within only 17 days, said the Financial Services Commission on March 30. According to the financial regulator, the number of those who enrolled in ISA plans that have been on offer since March 14 has been 1,027,633 as of the 30th. The total account balance was 588.18 billion won.
About 91.5 percent of customers (939,829) went through banks, while 8.5 percent (87,367) visited securities firm counters. In terms of sign-up money balance, banks accounted for 56.7 percent (333.71 billion won), while securities houses taking up 43.2 percent (253.95 billion won).
By type of ISA products, trust-type ISAs overtook discretionary accounts, whose investment is delegated to the broker by a wide margin: 98.8 percent versus 1.2 percent. The regulator predicted that the trend would change from next month when banks will be allowed to sell discretionary-type accounts both through their branch office counters and online channels.
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