Start-up of internet-only banks in South Korea

Start-up of internet-only banks in South Korea
South Korea’s government has begun to move to permit internet-only banks. It is in discussion with a group of financial institutions, vendors and other institutions, and the outline for internet-only banking services will be set up around April. In South Korea, most banks, we can say all banks, already offer direct banking including internet, mobile and smartphone, and many customers are accustomed to them. However, dedicated internet banks have not been allowed to date due to regulatory and other issues. Currently, there are two main challenges to setting up an internet-only bank in South Korea. 1. Identity confirmation through direct channel: the current law requires customers to open a new bank account at a face-to-face channel with their ID. So people visit a bank branch at least once to start banking transactions, although direct banking services are at a quite mature level in South Korea. The requirement for identity confirmation should be revised accordingly when permission is granted for dedicated internet banking. 2. Relaxation of the Separation of Banking and Commerce: in the current law, institutions belonging to the commerce sector cannot provide banking services, and their ownership share in a bank is stringently limited at 4%, compared to 25% in US and 20% in Japan. To encourage the entry of various kinds of sectors into the internet-only banking market, the relaxation of this law is one of the important issues. Currently, a number of institutions including banks, vendors and other sectors are negative on entering the market and will keep a wait-and-see attitude for now. Before entering the market, they should learn from case studies of overseas internet–only banks. To cite a case, there are many good examples of online account opening using the advanced facial recognition tools. I will appear at a conference on internet-only banking in Seoul on March 10, and will present case studies and learnings from the Japanese market. Anyone interested in the event details, please visit http://fintechkorea.com/.

Relevance in FS Advertising

Relevance in FS Advertising
Many financial service firms are going to great lengths to ensure advertising is timely, relevant and compelling. Indeed, campaign management applications promise this very thing,.with the objective of improving sales lead rates. While on a family trip from Atlanta to Ohio last week, I had the occasion to experience FS advertising at multiple venues along the way. Below are two examples. The first was classic. BP is offering a VISA rewards card with the ability to redeem rewards in the form of discounts applied at the gas pump. It is merchandising its new card with well-coordinated and well-placed pump signage – a great example of timely and relevant marketing. The only thing missing is a way to apply for the card while there at the pump. bp-marketing2

The second example was at a QT. I never did find the ATM.

wells-atm-at-qt

The newest alternate channel: Branch

The newest alternate channel: Branch
Visiting with lots of bankers and technology vendors at BAI, one hears a great deal about alternate channels, and multi-channel integration. My conclusion after all these discussions is that the new alternate channel is the branch. More customers use “alternate channels” such as internet banking, mobile banking, IVR and ATM, than use the branch. I think banks need to turn their thinking around and think of the automated channels as primary channels and the branch and call center as alternate channels when their primary channels can’t do the job. Most new consumers have already changed their mindsets. Bankers would be well advised to do the same. Branch is the alternate channel.

non-branch channels

non-branch channels
Two different banks in the past 30 days have come to Celent looking for help with non-branch channels, and the banks couldn’t be more different. One is a local bank in the US with a few dozen branches. The other is a global bank with operations in dozens of countries. Both are thinking about the shift of activities from branch to other channels as their clients change their behaviors. I believe that this will impact the technology infrastructure of all banks. Channel proliferation will drive banks to an SOA so that new channels, whatever they may be, can easily be added to banking infrastructure.
  • Branch
  • ATM
  • IVR
  • Call Center
  • Internet Banking
  • Mobile SMS
  • Mobile Web
  • Mobile Thick client / App
  • Twitter?
  • Facebook?
The list grows and grows. Since most of these channels are real time, systems will also need to be real time. Banks will need to invest to keep up.