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  1. Analysis
March 7, 2014

Country Survey: South Korea

One of the most innovative and healthy card and e-payment markets in the world, SK has long been the worlds testing ground for all things electronic financial services. Banks are not resting on their laurels however with many rolling out marketing campaigns designed to increase usage. CI reports

By Verdict Staff

One of the most innovative and healthy card and e-payment markets in the world, SK has long been the worlds testing ground for all things electronic financial services. Banks are not resting on their laurels however with many rolling out marketing campaigns designed to increase usage. CI reports

The South Korean card payments channel registered growth during the review period (2009-2013) posting a compound annual growth rate (CAGR) of 4.22% to reach 294.4 M cards in circulation by the end of 2013. The card payments channel valued KRW986.0 Tn (US$899.5 Bn) in 2013. Changing lifestyle demographics, the increased popularity of online shopping and higher disposable income per capita supported the growth of the volume of cards in circulation.

The debit card category occupied the largest share and grew at a review-period CAGR of 4.19%. Over the forecast period (2014?2018) the debit card category is expected to post a CAGR of 1.84%. The credit card category occupied the second-largest share at a review-period CAGR of 2.82%. The credit card category is expected to register a forecast-period CAGR of 1.80%.

Near-field communication (NFC) devices to increase the scope of mobile payments

NFC-based platforms for smartphones increased the volume of mobile commerce (m-commerce) transactions in South Korea. SK Telecom and KT jointly sold 250,000 NFC-enabled Samsung Galaxy Notes in December 2011 alone. Mobile operator KT rolled out NFC-enabled SIM cards in 2010, while South Korea’s third-largest mobile operator LG U+ rolled out the LG Optimus which enables NFC payments. In 2012, around 10 M NFC-enables phones were sold by KT, LGU+ and SK telecom collectively. Since NFC-based smartphones encourage card-based payments, telecom operators are replacing traditional SIM cards.

Banks adopt marketing strategies to expand their market share

The popular marketing strategies adopted by debit card competitors include partnering with shops to provide discounts, discounts on the purchase of specific goods and services or discounts targeting a certain strata of society such as vehicle owners. The common marketing strategies adopted by credit card competitors include partnering with retail outlets to offer discounts, offering reward points to customers, offering priority passes to corporate customers for airport lounges, offering convenient installment payment facilities, alphabet marketing and free technological up-grades. The marketing strategies adopted by the prepaid card category include brand promotions endorsed by actors, customization and design options, and convenient recharge facilities and partnering with foreign competitors to offer value-added services.

Spin-off credit card units increase competition in credit card category

Spin-off credit card units are expected to increase competition over the forecast period. Many banks and non-bank firms opt for spin-off credit card firms in association with existing competitors such as telecom operators. In 2010, Hana Financial established a joint venture with SK Telecom, South Korea’s leading mobile operator. Similarly, Woori bank span-off its credit card division in March, 2013, while Kookmin bank, part of the KB Financial Group span-off its credit card unit in 2011.

Rising debt and credit card delinquencies to encourage the use of debit and prepaid cards

As of September 2012, outstanding household debt in South Korea measured KRW937.5 Tn. During the first three-quarters of 2011, merchandize credit measured KRW1.6 Tn whereas in 2012 it reduced to KRW100 Bn. Over the forecast period this tendency is expected to result in a decline in demand for credit cards and an increase in the demand for debit and prepaid cards. The number of delinquent credit card borrowers measured 176,000 in 2011, almost a 30% rise over figures from 2010. The rise in credit card debt is expected to result in stricter lending practices by credit card issuers.?Government efforts to encourage debit and prepaid card-based spending

An increase in household debt burden has prompted the South Korean government to introduce measures to discourage credit card spending. The government reduced tax deductions on credit card transactions and increased tax deductions for debit and prepaid cards. During the first three quarters of 2011, merchandize credit valued KRW1.6 Tn. Comparatively, during the first three quarters of 2012 that value was reduced to KRW0.1 Tn. In an attempt to encourage the use of debit cards, the government passed a tax reform bill in 2012 which increased tax deductions on debit and prepaid cash card spending from 20% to 30%. This was reduced from 20% to 15% for credit cards. The move is expected to encourage use of debit and prepaid cards over the forecast period.

Digital gift cards to drive prepaid card category

Digital gift cards are considered to be a key driver of prepaid gifts cards. Korean retail competitor, Home Plus, introduced digital gift cards in association with HID global in 2010. The program allowed customers to customize cards by adding text and/or company logos. This strategy resulted in 200% growth in 2010. Digital gift cards have remained popular and are expected to be an important driver of the prepaid cards category going forward.

M-payments to register growth as telecom companies increase investment in payment platforms

South Korea is expected to record a growth across mobile-based payment platforms. This growth will be primarily driven by the nation’s two-largest mobile phone operators: SK Telecom and KT who jointly released 250,000 NFC-enabled Samsung Galaxy Notes by end of 2011. Mobile operator KT rolled out NFC-enabled SIM cards in 2010 and partnered with Japan’s DOCOMO to develop a payment device that will facilitate commuters between Japan and South Korea. LG U+, a telecoms operator in South Korea began offering NFC-enabled smartphones such as the LG Optimus. Other telecom companies are planning to replace traditional SIM cards with NFC-enabled SIM cards. This is expected to increase the scope of mobile-based payments over the forecast period.

  1. Analysis
July 29, 2011

Country Survey: South Korea

Competition is heating up in the South Korean cards industry as a number of joint ventures and spin-offs are changing the landscape of the market. Telecoms companies are moving into the cards space and the industry is witnessing an acceleration in the convergence of payments and mobile technology. Jane Cooper reports.

By Verdict Staff

Image of South Korea city skyline

Competition is heating up in the South Korean cards industry as a number of joint ventures and spin-offs are changing the landscape of the market. Telecoms companies are moving into the cards space and the industry is witnessing an acceleration in the convergence of payments and mobile technology. Jane Cooper reports.

 

South Korea is one of the largest cards markets in the world, with more than 115m cards in issue. The country’s regulator reported that card issuers saw their earnings increase in 2010 by 46%, with a combined net profit of KRW2.7trn ($2.5bn).

Such large figures, however, are not necessarily a cause of celebration as the industry is still reminded of the troubles caused by the credit card boom and subsequent crisis in 2002-2003.

The market bounced back from that crisis, but now there are concerns that the highly-competitive nature of the market could lead to another boom that could be characterised by excessive borrowing and spending.

The 2003 crisis was driven by aggressive marketing and freely-available credit. Cards were easily acquired and many consumers signed up for new card products to pay off their existing debts, a spiral that led to mass defaults and approximately four million Koreans unable to pay their bills.

At that time one of the major issuers, LG Card, had to be bailed out to the tune of $4.5bn, and strong regulatory reforms to the industry followed.

While ‘credit card’ is a term frequently used to describe payment cards in Korea, they are not usually revolving products. The cards are viewed more as a transactional tool, whereas in markets such as the US, credit cards are typically viewed as a means of borrowing.

Cards in Korea are typically charge cards, check cards or deferred debit cards whereby cardholders pay off their balance in full, but are then offered a cash advance or a credit card instalment loan.

It is the industry’s practices related to these card loans and advances that have come under the scrutiny of the country’s regulator again.

 

Credit risk

In March 2011, the head of the Financial Supervisory Service (FSS) warned the industry that the levels of competition could mean that risk controls are overlooked as players seek to win market share and entice consumers with compelling – but unsustainable – offers of credit.

There are also concerns that if the base rate continues to rise – currently at 3% – this will further strain the cost of credit and consumers’ ability to repay their debts, especially as household debt is already high.

The FSS has honed in on the industry’s sales and marketing activities and plans to introduce rules on what the industry can and can’t do in its attempts to win new customers.

The regulator plans to monitor the industry more closely and has vowed to take action, for example, against companies that sign up customers for products in the street. The practice, which is now banned, is believed to have contributed to the first crisis as it was almost too easy for consumers to sign up for credit while they were out shopping.

The regulator raised concern with the marketing spend of the top five card issuers – Shinhan Card, Samsung Card, Hyundai Card, Lotte Card and Hana SK Card, which was estimated to be more than KRW1.4trn for the first three quarters of 2010.

A local news report cited FSS estimates of there being 71,000 people working in sales and marketing for card companies at the end of September 2010. This compares to approximately 17,000 at the peak of the crisis in 2003.

Whether this competition and focus on marketing will cause a crisis is debatable. Research conducted by the Bank of Korea (BOK) suggests that there is no cause for alarm. Transaction values were approximately KRW250trn in the first half of 2010, 75% of the level prior to the crisis.

The central bank estimates that the overall risk undertaken by credit card companies is about half the level it was in 2002.

Aside from the lower levels of risk, BOK also states that a 2003-style crisis is unlikely to occur because of improved credit assessment and higher levels of loan-loss reserves. Also, the delinquency rates on cards were 1.4% in the first half of 2010, compared to 6.6% at the end of 2002.

Line graph showing the total number of cards issued in South Korea, 2002-2010

Consumer confidence

Even if Korean consumers are on the receiving end of competitive issuers’ marketing strategies, it does not mean that they will want to spend at similar levels to the previous credit boom.

The fears of a potential boom have further been tempered by a lack of a consumer willingness to spend, as well as expectations that economic growth will slow down. Figures from MasterCard Worldwide suggest that consumer confidence levels in Korea are low compared to other markets in the Asia-Pacific region.

According to the MasterCard Worldwide Index of Consumer Purchasing Priorities, the lack of confidence has been affected by a decline in exports, consumption and government spending. The report also notes that 6 in 10 Korean consumers plan to spend at current levels over the next six months while a quarter plan to decrease their spending.

These are just some of the issues that are affecting cards executives this year. Iqbal Singh, card business group head of Citibank Korea, has said that aside from the tighter control on companies’ card promotions, product launches and sales force, there are a number of other challenges the industry faces in 2011.

Singh notes that other regulatory pressures are an issue, such as higher minimum payments for revolving card products and higher loan-loss ratios.

Dong-ho Lee, senior general manager of credit cards at Standard Chartered First Bank, highlights another issue for the industry: merchant discount rates (MDR). There is regulatory pressure to decrease the fees that merchants have to pay to accept payment cards, particularly to reduce the burden on small and medium-sized retailers. Interchange fees are an issue in markets around the globe, and downward pressure on merchant charges is a common feature of the industry.

However, this is particularly a challenge for the Korean cards industry as many of the products are not revolving credit cards and do not carry the same potential for income from interest payments on card borrowing as other markets, such as the US, would have.

Since most of the cards are charge cards, the industry relies more on the income from the merchant fees than other markets that have established revolving credit products.

 

Market consolidation

Regulatory pressures aside, a major trend that all industry observers note is the changing landscape of the various players in the Korean market, which is adding to the competition.

Lee says that one of the recent features of the market has been inorganic growth through mergers and acquisitions, joint ventures and spin-offs.

“Since the Korean credit card market is quite saturated, there is clear limitation on organic growth, thus this type of inorganic approach will be continued going forward,” says Lee.

In March, KB Kookmin Card was spun-off from the KB Financial Group, and its new CEO Choi Gi-Eui has been reported as saying he aims for KB Kookmin Card to be the largest issuer of cheque guarantee cards in Korea, adding the company will pursue realistic goals rather than setting reckless targets.

Other monolines are expected to be created. The National Agricultural Cooperative Federation, known locally as Nonghyup, is also planning to spin-off its card division as part of the cooperative’s separation of its financial and industrial operations. Woori Financial Group is also intending to spin-off its credit card operations, according to a local news report.

While some of the players are planning to create stand-alone card monolines, other issuing banks are involved in acquisitions that could create large financial institutions with card divisions that will challenge the market share of the other players.

Korea Exchange Bank (KEB) has been an acquisition target for years and has gone through a number of failed bids because regulators have not been able to approve a sale. The majority stake in KEB is currently owned by private-equity firm Lone Star, but legal wrangling continues over the company’s original purchase of the stake.

Legal disputes remain about whether Lone Star is entitled to sell the stake because its executives have been accused of buying the stake illegally by artificially pushing the company’s value down.

KEB has been playing a waiting game while it awaits regulatory approval for the sale of the stake and observers comment that it has not been able to develop a strategy while it is in the process of being sold. The latest bid for the 51.02% share of KEB comes from Hana Financial Group, which has offered KRW4.7trn for the transaction.

In March, the regulator put off its decision on whether approval would be granted for the takeover, amid continued court appearances of the former CEO of Lone Star Korea who is accused of manipulating KEB’s share price through market rumour.

If the regulator does grant approval and the Hana deal goes ahead, a Tier 1 bank would be created, adding another large player to the already competitive cards market.

 

Alternative channels

Competition is also entering the market in the form of telecoms companies, who are looking to make their own acquisitions and develop mobile payments technologies. Recent purchases have further accelerated the convergence of payments with mobile technology, with Korean consumers tipped to use mobile devices for everyday payments on a widespread scale.

Korean consumers are already tech-savvy and the country is known for its high levels of mobile and internet penetration. It is also home to the handset makers Samsung Electronics and LG Electronics, who were taken by surprise by Apple’s entrance into the Korean market.

Both companies were forced to raise their game on a domestic level when the iPhone was introduced to Korean consumers in November 2009. Samsung has since rolled out the Galaxy S Android smartphone, which has also proved popular on a global level.

Figures from the Korea Communications Commission show that in March 2011 there were approximately 10m smartphone users in Korea, which is predicted to rapidly rise to 20m by the end of 2011. With figures such as these, the cards market is well primed for payments to be combined with this technology.

Mobile operators have already made their move in the payments space. In December 2009, SK Telecom announced it would buy a 49% stake in Hana Card for KRW400bn. The deal allows SK Telecom to acquire payments expertise while it gives Hana Card access to the telecom operator’s customer base of approximately 24m people.

Another telecom company, KT Corp, has also made a move into the cards industry. In February, KT Corp announced that it would buy a 33.85% stake in BC Card, buying a 20% stake from Woori Bank and 13.85% from Shinhan Card.

 

Central player

BC Card is the largest card company in Korea and has more than 50m cards in issue and a merchant base of three million. The company was established by a consortium of banks, and it is an interesting trend for some issuers that a telecom company now owns part of the company.

One of the issues facing the industry is how such a move will affect the company, which has traditionally been owned by the banks. Some concerns have been expressed that the development of mobile payments could only benefit some banks, while others could be left behind in the mobile-payment revolution.

It is not just banks, however, that are affected by these issues as there are other major issuers that do not have banking origins. A unique feature of the Korean market is that some of the major issuers are part of conglomerates, which means that they are able to collaborate with their affiliates, such as Hyundai Card and Hyundai Motors, Samsung Card and Samsung Electronics, and Lotte Card and the food and shopping conglomerate Lotte.

The existence of BC Card is another definitive feature of the Korean market, in the sense that it is an end-to-end card processing platform that spans both issuing and acquiring. The company acts as an issuing host and issues and delivers cards on behalf of 11 financial institutions.

It is also an acceptance and processing network, and acquires and manages the merchant base. BC Card also offers other services to issuers such as customer relationship management, marketing, brand management, product development and research and analysis.

Unlike other cards markets, this set up creates a three-party network where one player is on the issuing and acquiring side of the cardholder. Unlike the four-party model, the Korean cards industry does not need to rely on a middle-man network to connect issuing banks with acquiring banks.

One observer comments that this makes Korea unique as it has been able to develop a cards payment system of its own, built to its own standards without having to rely on outside networks.

He also says this is much more efficient as it means that financial institutions can concentrate on issuing cards, rather than having an acquiring division at the bank as well. This is particularly important in an environment where merchant acquiring margins are being squeezed and Korean regulators are exerting a downward pressure on merchant fees.

BC Card is dominant in terms of processing domestic transactions and international networks, such as Visa and MasterCard, have to rely on co-brand deals to gain a presence in the market.

Typically a co-brand card will carry both the BC Card and international network’s logo, and when the cardholder travels overseas the card will be used on the international network. BC Card has been working on building its alliances with other international networks so that issuers can offer cardholders a card that can be used overseas.

For example, in January 2010, BC Card announced an agreement with Discover Financial Services so BC Card cardholders would be able to use their cards on the Discover, Diners Club International and PULSE networks when they travel outside of Korea.

The deal means Discover is able to increase the international acceptance of its brand, while for BC Card it can offer its cardholders international usage of their card.

As Koreans are increasingly travelling overseas, and issuers are beginning to reach out to Korea’s expatriate segment, this international acceptance will be noticed – and appreciated – by Korea’s cardholders.

Consumers, however, are likely to take note of the developments in mobile payments as well as all the attractive offers that are being made to them by the number of issuers jostling for market share in the competitive marketplace.

Table showing the volume of payment by methods daily averages in South Korea

  1. Uncategorized
June 27, 2011updated 04 Apr 2017 4:15pm

Country Survey: South Korea

Payment volumes have been steadily increasing in South Korea, growing in line with the pace of the countrys economic development, as well as its technological innovations. As Korea' companies and population look beyond its borders for travel and business, this growth is set to continue. Jane Cooper reports.

By Jane Cooper

Photo of the Seoul skyline at dusk

Payment volumes have been steadily increasing in South Korea, growing in line with the pace of the country’s economic development, as well as its technological innovations. As Korea’s companies and population look beyond its borders for travel and business, this growth is set to continue. Jane Cooper reports.

 

As the South Korean economy grows, and Koreans increasingly look beyond the country’s national borders both for travel and business opportunities, there is an increasing need for the country’s payments industry to develop its cross-border payments services.

Recent developments have seen Korean banks develop their cash management and treasury services for Korean businesses, while co-operation with international networks has improved so that Korean travellers can use their payment cards more easily overseas.

The Korean payments industry is also changing rapidly because of the nature of technological developments. South Korea was one of the first countries in the world to achieve a high level of broadband penetration, which has facilitated the adoption of online payments.

Now that innovation is moving to mobile technology as telecommunications companies in Korea set their sights on the payments space. This year is expected to see the strong development of all types of payment services for smartphone users.

Against this backdrop, the oversight of this changing payments landscape is a topic of discussion. Currently the central bank – the Bank of Korea (BOK) – is in discussions to find ways of strengthening its management and oversight of payments and settlements.

This has been, in part, spurred on by the lessons of the global financial crisis about how crucial and systemically important the payments systems are to a country’s economy and financial health.

The central bank owns the main large-value payment system, BOK Wire+. The value of payments that runs through this real time gross settlement (RTGS) system accounts for more than three-quarters of non-cash payments in South Korea, according to BOK estimates.

Payment values have seen a significant increase on BOK Wire+. For example, in the first half of 2010 the value of average daily settlements processed on the large-value payment system was KRW197trn ($183bn). This was an increase of 13.8% from the KRW173.1trn ($160bn) of payments that were processed in the first half of 2009, according to figures from the central bank.

BOK-Wire has been operating since 1994, and in 2009 it was upgraded and renamed BOK-Wire+ after nearly four years of planning the conversion to the new system. The central bank says the launch of the new system was seamless and implemented on schedule despite the disruption caused by the global financial crisis.

The new RTGS system is said to be a massive improvement on the older version and there has been no system failure or disruption since it was launched on 27 April 2009. According to the Bank of Korea, the new system has reduced liquidity requirements by 19.3%.

Table showing the value and volume of South Korean financial services, 2006-2010

 

System upgrade

The central bank has been working towards improving this system and, in June 2010, implemented a model whereby the participants using BOK-Wire+ were tiered, meaning users were streamed into direct and indirect participants.

The indirect participants would be able to use the system and check the status of their transactions through a direct member of BOK-Wire+. The central bank is currently working on ways to tighten up the requirements and the distinction between direct and indirect participants.

The direct participants will be subjected to an annual review to check they continue to meet the membership criteria. If they do not, they will have to become an indirect participant and access the payment system through a direct member that does meet the requirements.

The BOK-Wire+ is used for large-value transactions while the smaller payments are operated through the retail payment systems, which are overseen by the Korea Financial Telecommunications and Clearings Institute (KFTC). KTFC is a non-profit organisation jointly owned by its member banks. Services offered include a giro system, cheque-clearing system, the interbank network, ATM network and a cash-management service.

In 2004, a ‘Payment versus Payment’ system for foreign exchange transactions through CLS Bank was established and the number of banks going live with the system has increased in recent years.

At the end of 2009, there were 17 Korean banks and 11 international banks using this system to settle foreign exchange transactions. Payments through this system have increased significantly since it was launched. For example, in the fourth quarter of 2009 the value of settlement through the CLS system was $37.1bn. This increased to $49bn by the second quarter of 2010.

Recent developments at the KFTC include moving promissory notes to digital form, so current account cheques and promissory notes – post-dated cheques – can be truncated. This function was deployed at the end of 2010.

In another development in South Korea’s payments industry, the KFTC is working to build cross-border use of the ATM networks.

Table showing the value of South Korean payment by methods, daily averages, in KRWbn

 

As Koreans increasingly travel overseas, there is now more need for the payments industry to enable their ATM cards to work in other countries. Korea is currently involved in discussions with networks from other countries so that Koreans will be able to withdraw money from their accounts when they travel overseas.

This is expected to be done with lower fees than is currently seen, and these arrangements are expected to bring increased revenue to the banks.

The numbers of international visitors to Korea is also increasing, which in turn also increases the demand for international cards to work in Korea.

ATMs have long been a source of frustration for visitors to Korea, who, even though they may have an internationally-branded network card, could not use that card at a domestic ATM carrying the same logo.

Cards on international networks in the past typically only worked at ‘international ATMs’, which were more often than not found at international five-star hotels or at the foreign banks. ATM acceptance for foreign cards is also beginning to change and international cards are more widely accepted in Korea.

This year, KFTC also plans to develop the giro payment system so bill payments or direct debits, for example, can be made 24 hours a day. Added to this, the service will reduce its reliance on paper and the length of paper-based forms, in a bid to make the process less cumbersome and also help the environment.

Perhaps the biggest and noticeable development this year will be how smartphones can be used for all types of retail payments, especially as estimates from the Korea Communications Commission predict there will be approximately 20m smartphone users in Korea by the end of 2011.

KFTC has indicated that smartphone-based services will be a focus for the industry in the coming months. Along with the anticipated increase in the use of this technology, however, is the fear that smartphones will increasingly be the subject of phishing attacks.

Smartphone security is a major concern, with local news reports warning phishing attacks are on the rise, and people’s financial information is at risk of being stolen. Industry officials, however, argue the security is no worse than on other devices, such as a PC. Consumers thus need to be vigilant about what they respond to and what they download via smartphones, in the same way as they would with phishing attempts via email.

Table showing the volume of South Korean payment by systems (daily averages, thousand transactions)

 

 

Table showing the value of South Korean payment by systems (daily averages, thousand transactions)

Online and mobile

In terms of security for internet payments, Korea has developed the Yessign system whereby all users have a unique digital certificate they use when paying online.

The externally-held Yessign certificates have to be validated before the user can enter the online payments platform. These digital certificates can also be stored on mobile phones using Mobisign, which the industry purports to be of the same level of security as regular internet payments.

As the use of the smartphone payments is expected to increase, so are the attempts by hackers to find vulnerabilities in the system and hence mobile security is expected to be a continuing focus for the industry.

The focus on mobile payments is in line with a general trend in Korea’s payments industry in moving to mobile-based payments. Telecommunications companies (telcos) are increasingly moving into the payments space and are encroaching, particularly in the consumer arena on the area, that has been traditionally held by cards companies.

Mobile operators have already made their move in the payments space. In December 2009, SK Telecom announced it would buy a 49% stake in Hana Card for KRW400bn ($340m). The deal allows SK Telecom to acquire payments expertise while it gives Hana Card access to the telecom operator’s customer base of approximately 24m people.

Another telecom company, KT Corp, has also made a move into the cards industry. In February, KT Corp announced it would buy a 33.85% stake in BC Card, through buying a 20% stake from Woori Bank and 13.85% from Shinhan Card, which is expected to complete in May this year.

BC Card is the largest card company in Korea and has more than 50m cards in issue and a merchant base of 3m. The company was established by a consortium of banks, and it is an interesting – and worrying trend for some issuers – that a telecom company now owns part of the company.

One of the issues facing the industry is how such a move will affect the company, which has traditionally been owned by the banks. It has been argued that such a move demonstrates the convergence of mobile and traditionally card-based payments and signals the rising dominance of mobile companies in the payments industry.

It is not just banks, however, that could lose out from the telcos move into payments. A unique feature of the Korean market is that some of the major issuers are part of conglomerates, which means that they are able to collaborate with their affiliates. These include Hyundai Card and Hyundai Motors, Samsung Card and Samsung Electronics, and Lotte Card and the food and shopping conglomerate Lotte.

These large corporations, aside from their issuing divisions, also have changing payments needs as they become increasingly globalised and seek to develop their exporting business.

In terms of cash management and treasury services, it has traditionally been large international banks that have only had the capabilities to offer the range of services that multinational corporations need.

In Korea, the large international players in the field – such as JP Morgan – have had a presence to facilitate the payments of global corporations that had a presence in Korea.

 

Cash management

The role Korean banks have played in cash management services has been to service the small and medium enterprise sector, which is also becoming increasingly globalised as Korean companies look overseas for their international expansion.

As their international exporting business expands so does their need for global transaction services.

This has been the area for Korean banks to focus on as the highly tailored payments service that large multinational corporations require has been typically already performed by the global banks.

The competition in this SME market is growing and Korean banks are increasingly turning their attention to larger clients.

As with other parts of the payments industry in Korea, technological developments have played a key role in delivering more efficient and cost-effective solutions.

As the Korean economy continues to open up to international markets, the Korean payments systems will become increasingly globalised.

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