Hana Bank brand ambassador and actor Kim Soo-hyun promotes the firm`s new car financing services (Hana Bank)
South Korea’s banking groups have started upgrading their auto loan and financing services to the next level this year, aiming to go beyond their traditional business to attract mobile-first customers.
KB Financial Group, the nation’s No. 1 banking group by total assets, has expanded its car financing services offered via online and mobile platforms, mostly through its leasing and installment financing unit KB Capital.
On Jan. 4, KB Capital signed a deal with Volvo’s electric vehicle brand Polestar that allows customers to choose the type of car and financing they want on the same online platform. The fast and easy service -- which takes just 60 seconds to complete according to KB Capital -- marks the first of its kind between an automaker and a financial institution here.
KB Capital also renewed its contract with Jaguar Land Rover Korea, the local importer of the British car brand, earlier this month, offering exclusive services for customers. Long-term car rental services, 72-month loan installment offers and deferred interest-free installments for some models are key benefits to be offered.
KB also adopted the government-led financial data service “MyData” technology to its mobile used car financing platform KB Chachacha. The integration will allow users to see their car loans and installments as part of the comprehensive finance data of their spending, bank account balances, loans, insurance and more, enabling customers to manage their finances more efficiently.
An online and mobile auto financing platform operated by KB’s industry rival Shinhan’s credit card issuer is projected to get an upgrade this year due to its popularity, the firm said earlier this month. Shinhan Card’s auto financing platform MyCar in December said its average monthly users jumped 215 percent to 600,000 from 190,000 on-year in the cited period.
Millennial and Generation Z customers accounted for 47 percent of MyCar users, Shinhan Card said, indicating that a new generation of customers prefers online auto financing services compared with face-to-face ones.
Key subsidiaries under banking groups have been collaborating with each other or with startups to better cater to customers seeking in-depth car financing services.
Woori Financial Group’s flagship banking unit Woori Bank recently struck a deal with Woori Card and Woori Financial Capital to launch the comprehensive online and mobile auto financing platform Woori One Car. The service analyzes the users’ credit line through accounts opened in Woori and provides appropriate car-related loan options. If the user registers his or her car license plate on the app, they are offered information on their regular check-ups and current market value of the vehicle.
In December, Hana Bank partnered with Cardong, a car valuation platform here, to add valuation services to its auto financing services. Through its existing mobile app Hana 1Q, its users can calculate the valuation of the car they want and receive information on various tax credits and other financial support.
The banking groups’ latest efforts come as the number of customers who prefer to purchase cars with installments via credit cards and loans from leasing and installment financing firms is growing fast.
The outstanding value of loans extended by leasing and installment financing firms such as KB Capital -- called “capital businesses” here -- for customers buying cars amounted to 27.7 trillion won ($23.1 billion) as of end-September last year, latest data from the Financial Supervisory Service showed.
In the same period, customers of six major credit card issuers here -- Shinhan, KB Kookmin, Woori, Samsung, Hana and Lotte -- paid a combined 9.7 trillion won with cards from the companies to purchase cars, according to a separate FSS data. The figure is 13.1 percent larger than 8.6 trillion won in 2020, and more than doubled from the 5.4 trillion won posted in 2017.
By Jung Min-kyung (firstname.lastname@example.org)