Yoon Jong-kyoo, KB Financial Group Chairman, said the group will closely follow changes coming with the so-called “fourth industrial revolution” in order to make sure KB Kookmin Bank recovers its past glory as the No. 1 bank in Korea.
The bank is a key affiliate of the largest financial group in the country.
“We need to take notice of the changing IT trends represented by mobile financial services and artificial intelligence technologies,” Yoon said at an event celebrating the bank’s 15th anniversary. “We have to be prepared for the next 10 years.”
Yoon, who is also KB Kookmin Bank’s President, said the convergence of new technologies with conventional financial services comes at a time when the Korean financial industry is faced with other changes, including the rapid implementation of fintech and internet-exclusive banks that are expected to be in full service next year.
The local banking industry has been trying to diversify its business portfolios as the traditional business model is believed to have reached its limits, especially with interest rates remaining so low for so long.
The market is betting that the Korean central bank will not normalize its loose monetary policy in the immediate future, especially as think tanks have been lowering their outlooks for Korea’s economic growth for next year. “We need to make efforts in IT development so that we will not fall behind a world that is centered on ICT,” Yoon said. “Already many global financial companies describe themselves as IT companies and even elementary students are learning (computer) coding and programming.”
Yoon warned that in the near future offline bank branches will be downsized. He said the bank needs to be prepared to provide services that differentiates itself with artificial intelligence and automation, citing the rise of “chatbots” and “robo-advisors.”
Yoon also stressed the need for changes in marketing. Instead of waiting for customers to walk through the door, which has been the practice of banks in the past, he said banks have to reach out to potential customers. More than 90 percent of the simple services like checking a balance on a bank account are handled through mobile and internet banking.
According to data from the Financial Supervisory Service (FSS), KB Kookmin Bank had 12 subsidiaries, branches and offices outside the country at the end of 2015. This was the lowest among its five rivals. KEB Hana Bank had the most with 37, followed by Eximbank Korea (25), Korea Development Bank (23), Woori and Shinhan banks (both 24) and Industrial Bank of Korea (13).
KB Kookmin Bank posted a 29.3 billion won net profit in its overseas business last year, down 6.7 billion won from a year earlier. The share of net profit from its overseas business declined to 2.65 percent in 2015 from 3.5 percent in 2014.
In comparison, KEB Hana Bank netted 207.9 billion won through overseas business last year, up 22.7 billion won from 185.2 billion won in 2014. The share also increased to 21.4 percent from 14.9 percent.
An official at KB Kookmin Bank said, however, it was part of the bank's strategy to be more prudent in expanding its business.
"When it comes to overseas business, the bank has to conduct studies about the local situation as much as possible," the official said. "It is hard to say the BCC case had no impact at all on the bank's globalization strategy. But the past year has been a period for us to study the situation of the overseas market."
After taking the group's helm in late 2014, Yoon stressed the importance of globalization, but also said the bank has to be "prudent" about entering foreign markets.
In December, the bank opened its fifth Chinese branch, in Shanghai, marking its first overseas entrance in two years. Market watchers say the branch's performance will likely be a gauge of the bank's overseas business direction.
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