South Korea’s commercial banks are rushing into the delivery service market, challenging the country’s big tech and retail companies that have blurred boundaries between finance and tech industries.
According to Shinhan Bank, it will start its food delivery beta service Wednesday. The delivery app, dubbed “Ddaeng-gyoeyo,” is a separate app from the bank’s all-in-one mobile app “Shinhan SOL.”
The service will also be operated through a third-party delivery service platform “Saenggakdaero.”
Just like other delivery apps, it offers a list of franchise restaurants or cafes within a delivery radius. The only difference is that the app doesn’t charge for any advertisement costs and commission, according to Shinhan Bank.
The delivery app will start its service in five districts in Seoul, including Gangnam-gu and Seocho-gu. It plans to expand the service to Gangbuk in northern Seoul.
Woori Bank, after joining hands with 7-Eleven, also began its convenient store delivery service through its mobile app.
Woori Won Banking app users can order deliveries from 7-Eleven from 11 a.m. to 11 p.m.
Since August, NH NongHyup Bank has been providing a flower delivery service through its mobile app with Korea Flower NongHyup, the country’s agricultural cooperative for flowers.
Commercial banks’ sudden entry into the delivery business comes as they feel a need to defend themselves against big tech companies that have infiltrated into the finance business, industry analysts say.
Tech behemoths Naver and Kakao have aggressively expanded its presence in the financial industry through its subsidiaries. Relying on their mobile platforms that allow easy payment, they offer a wide set of financial services ranging from asset management to personal banking.
But market insiders say challenges lie ahead for banks that are looking to push boundaries like the big tech.
Although banks wish to provide more life services from their mobile platforms, financial authorities impose strong restrictions, industry sources said.
“Only if banks are allowed to carry out life services as concurrent or subsidiary businesses or to own their own platform companies, will they have a shot at becoming a super platform that covers both financial and nonfinancial services like big tech firms,” a bank official said.
Still, banks are looking forward to more relaxed regulations, following the top financial regulator’s recent remarks.
“In order to support banks’ efforts to become a platform for life and financial services, we will actively find alternative ways concerning the issues such as concurrent or subsidiary businesses, partnership with fintech companies, Super One-app strategies as well as their digital transformation,” said Financial Services Commission Chairman Koh Seung-beom during a press conference Wednesday.