Woori Bank is set to launch its mobile virtual network operator (MVNO) service, "Woori WON Mobile," next month, marking a significant step in its expansion into non-financial sectors. This move aims to leverage telecommunications data to attract new customers and boost ancillary transactions, although the profitability of this venture remains uncertain.
Woori Bank's Entry into the MVNO Market
Woori Bank has completed its registration as a telecommunications business operator and plans to offer a range of plans from 7,000 won to 30,000 won per month. This initiative follows the Financial Services Commission's designation of MVNO services as a supplementary business for banks in April last year, prompted by KB Kookmin Bank's earlier application.
KB Kookmin Bank's Liiv M: A Precedent and Competitor
KB Kookmin Bank, which launched its MVNO service Liiv M in 2019, is already taking measures to counter Woori Bank's entry. Recently, KB Kookmin Bank introduced senior-friendly plans targeting customers in their 60s, offering monthly rates in the 10,000 won range. They are also running a cashback event for customers who pay their bills with KB Kookmin Card points or switch their mobile number.
Liiv M boasts 430,000 subscribers, with over half being in their 20s and 30s. KB Kookmin Bank reports that Liiv M has led to increased financial transactions, such as higher deposit and loan balances and new card issuances among these younger customers. However, Liiv M has accumulated an operating loss of 60.5 billion won over the past five years, raising questions about the profitability of the MVNO business for banks.
Banks' Diversification Efforts Amidst Profitability Concerns
Despite the challenges, banks are actively diversifying their businesses to expand their customer base and explore new revenue streams. Shinhan Bank's food delivery app "땡겨요" and Hana Bank's sports ticket booking service are examples of such efforts.
Industry Expert's Perspective
Professor Shin Min-soo of Hanyang University's School of Business emphasizes the potential benefits of banks entering diverse sectors like MVNO, including access to new consumer data and the ability to create bundled products for customer retention. However, he also stresses the importance of banks approaching these ventures with a commitment to the market's development, rather than solely as a means to enhance their core business.
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