The prospect of big tech firms taking over the realm of retail banking has been setting off alarm bells in traditional banks in South Korea including Woori, one of the big five lenders that has dominated the industry for decades.

But Hwang Weon-cheol, Woori’s chief digital officer who has been leading the bank’s digital transformation, believes the bank still has strengths that the newcomers don’t have.

The growth of big tech firms like Kakao, operator of the country’s largest mobile messenger app, which has an online-only banking unit, is significant, he admits.

But he says they might meet challenges soon in the course of expanding their business.

Unlike retail banking, investment, private and corporate banking services require higher quality services that benefit from the sophisticated human touch that can be provided at physical spaces -- something that only offline banks with decades of experience have.

“Kakao is a powerful rival in retail banking, but consumers will reach a saturation point at some time. The question is what’s next (for the company). It will need an answer for that,” he said in an interview with The Korea Herald. “People say artificial intelligence can replace bankers and branches. But I don’t believe so.”

Likening the online bank to fast food and traditional players to fine dining, Hwang said that the popularity of the former doesn’t mean a collapse of the latter.

South Korea’s financial industry has been embracing more radical changes for digitalization than many other countries, and such transformation was possible because of the government-led initiatives, such as MyData.

MyData services enable consumers to independently choose their financial services and have control over their data.

“Korea is a very radical market where (the government) builds a fire under players to join the game,” he said.

“Almost every service you can imagine can be done here without visiting bank branches, including opening a bank account, trading stocks, taking up an insurance policy and issuing a credit card.”

Against this backdrop, new players are entering the financial market to launch innovative services and existing banks are seeking to discover ways to depart from an established course for new business models to secure future sources of profit.

The strategy that Hwang came up with to differentiate Woori Bank from other rivals was a rebundling of financial services for customers to bring payment and e-commerce experiences under one roof.

“Commercial banks so far have been offering money storage services and financial products, but our goal is offering bundling of supplementary and derivative services involving money and all economic consumption activities,” he said.

For instance, Woori Bank embedded medical insurance claims services in its mobile application in January, enabling policyholders of 31 different insurance companies to get reimbursed without the hassle of collecting paper bills from hospitals.

“The whole process of filing insurance claims ends when claimants finally receive the reimbursement into their bank account. So offering a one-stop solution makes users’ financial lives more convenient,” he said.

Over 14,000 cases have been filed through the app since its launch as of end of June, giving Woori motivation to bring up the idea of linking pay slips and tax bills into the platform.

“We need to bring all services and businesses as much as we can to Woori Bank’s platform. What we do now is only the tip of the iceberg. Trial and error will continue down the road,” he said.

Woori has been seeing record levels of digitalization in terms of the portion of revenue created from mobile and online banking as well as the number of customers and products.

“Growth in digital retail banking is our biggest goal and we’re going to focus on increasing traffic volume for that. After the organic growth, we will seek inorganic growth as well,” he said.

The banking group plans to acquire new businesses to tap into Southeast Asian markets including Vietnam, where the bank has secured the biggest presence among other Korean lenders.

But it plans to go outside the box of its business portfolio such as securities, credit cards and loan servicing. “By using network we have, we will seek business opportunities in digital business areas such as e-commerce.”

Having started his career as a financial service consultant at Hewlett-Packard in 1994, Hwang worked for financial institutions including KB Financial Group and Hana Financial Investment prior to joining Woori Bank in 2018.

Despite his 20 years of experience in merging information communication technology with financial services, planting a digital-oriented corporate culture was a more challenging task than setting a business strategy.

“At the end of the day, I guess my ultimate role is to give a fresh impetus to this company to embrace cultural changes ... so that the organization as a whole can cultivate new business models, and go beyond the way it is today.”