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Digital Banking

Hana Financial Group has been staying ahead of the curve in digital innovation. Drawing on the competitive advantages, we now are accelerating digital transformation of products, services, and channels, thus repositioning ourselves as a customer-centric financial platform company.

STRONG GROWTH OF DIGITAL BAKING
  • INCREASING MAU WITH DIGITAL CHANNEL IMPROVEMENTS Hana Financial Group maintained its growth pace in 2021 on the back of the strengthened digital channel competitiveness of Hana Bank, Hana Financial Investment, KEB Hana Card, and other Group affiliates. Hana Bank’s “Hana 1Q”, the Group’s leading smart finance app, continued improving its functions, providing easier and more convenient services to customers. Equipped with the single sign-on (SSO) technology, Hana 1Q allows users to conduct not only banking but also stock, card, insurance, and other financial transactions.

    Also available are a wide range of daily life financial services, from MyData-based asset management to online shopping, health care, rental car, travel services as well as real estate investment. Attracted to such advanced functionalities and insightful content, number of monthly active users (MAUs) is steadily rising, reaching 4.4 million, a 9.6% YoY increase, at the 2021 year-end.

    Hana Financial Investment’s MAUs also went up, 26.9% YoY, to 490,000 mainly attributable to the launch of “1Q STOCK” and a substantial inflow of new customers following the formation of alliance with KakaoBank and other fin-tech giants. The latest version of the existing mobile trading system (MTS), 1Q STOCK is faster in transaction execution, easier to use, and more customizable. Also launched were new MyData services. While continuing to improve 1Q STOCK and MyData services in 2022, the company will focus on further expanding the digital customer base by providing diverse digital content on investment.

    KEB Hana Card recorded an MAU of 2.4 million in 2021, up 8.6% YoY. It is working to overhaul its payment service “1Q Pay” into a comprehensive financial platform for remittance, payment, asset management, and expenditure management. The company launched an open banking service in September 2021 and a MyData service in December, and plans to substantially improve customer convenience through full-scale reform of UI/UX and app integration in April 2022, through which it seeks to transform into an advanced comprehensive financial platform.

    In August 2020, Hana Financial Group applied an open API-based SSO system to the new “Hana 1Q”, a mobile banking app, which enables customers to use various services of the Group affiliates with a one-time log-in. Also available are diverse daily finance contents provided in cooperation with real estate, mobility, health care, and other business partners. Hana Insurance, which became a new member of Hana Financial Group in 2020, applied the SSO technology to its “Hana 1Q Insurance”, thus expanding the bi-directional SSO with the Bank and increasing customer convenience.

    ACCELERATING THE DIGITAL TRANSFORMATION OF PRODUCTS AND SERVICES Hana Financial Group is expanding digital channels with innovative technologies. In the first half of 2021, Hana Bank adopted “My Branch”, a virtual banking service, offering both the convenience of digital banking and the customer-specific attention of the branch service, in the areas of customer care, product description, consulting, and other customized services. The My Branch service, a new branch digital transformation (DT) platform, that facilitates offline to online (O2O) business, can be categorized into two – a corporate type configured to meet the financial needs of corporate employees and an apartment type set up for apartment residents. The service is unique in that, from our employee’s perspective, it serves as an optimal tool for attracting new customer segments each comprising businesses, apartment residents, and community members, while for customers, it offers the convenience of subscribing to products without having to download an app or log in. Thanks to these and other strengths, around 9,000 branches and some 55,000 accounts (around KRW 3.7 billion) were opened by the end of 2021, and about 32,000 loans (around KRW 980 billion) were made.

    Big tech companies are increasing their share of the loan market, fueling market competition. In response, Hana Bank is approaching current market situations from a mid- to long-term perspective with a focus on product differentiation. Regarding SOHO loans, the Bank plans to improve loan products for professionals and franchises to be more detailed and competitive, and, as non-face-to-face guarantee loans are planned to be launched following the agreement with loan guarantee institutions, it will cater small business loans mainly to SOHO customers with good credit ratings. “Hana 1Q Apartment Loan”, which accepts apartments as collateral, offers second mortgage loans to apartment owners looking to supplement their daily expenses as well as mortgage loans to single home owners, with a plan to expand the loan target to include other housing types in 2022. In comparison with mortgage loans of financial companies affiliated with big tech companies, Hana 1Q Apartment Loan is competitive. Also, we will seek to increase sales of Korea Housing Finance Corporation’s fixed-rate mortgage loans (including long-term fixed-rate loans), which are not catered by big tech companies, and steadily supply new apartment installment payment loans and other products to expand the customer base.

    We are speeding up the digitalization of household loans by rolling out online-only product, such as Hana 1Q Apartment Loan and Hana 1Q Jeonse Loan, in addition to strengthening of our digital channels including My Branch. The proportion of new loans processed through non-face-to-face channels grew 16%p YoY to 52% in 2021.

    Online credit loans are steadily increasing as well, led by “Hana 1Q Credit Loan”, posting a YoY rise of 3%p to 89% of total credit loans. In addition, we successfully adopted an online process for extending unsecured loans, and plan to apply a similar process to collateralized and Jeonse loans in 2022. We also overhauled “Hana 1Q” with a focus on main products, helping customers find products that satisfy their needs with ease, and increased customer convenience by adopting an easy-to-follow loan application cancelling process.

    Digital channels are growing sharply not only in loan sales but all areas. In 2021, Hana Bank’s digital channels accounted for 56% (based on number of cases) of its retail sales. The digital channels’ share was 53% in the savings and deposit, while household loan and asset management shares were 66% and 57%, respectively.

    Hana Financial Investment continued to grow in all areas, including customer base, transaction volume, and digital user engagement. Active digital channel users grew 11%p YoY to 58% of total customers, contributing to 14%, 46%, and 65% YoY increases in digital channel-based sales volume, operating income, and net income, respectively.


KEY DIGITAL INNOVATION IN 2021
  • PRODUCTS AND SERVICES Launching “Hana HAP” – MyData brand

    Fully implemented in 2022, “MyData” service is a starting point for the race of Internet-only banks and big-tech-affiliated financial institutions, not to mention financial companies, for digital finance dominance. In response, Hana Financial Group aims to become a leading platform business operator, offering distinctive MyData-centered, hyper-personalized services. To this end, we launched a unified organization consisting of representatives of all Group affiliates, together pushing forward the MyData service project. The Group is participating in the MyData service through four affiliates of the Group – Hana Bank, Hana Financial Investment, KEB Hana Card, Finqq – the most among financial groups in Korea. Thanks to organic collaborations among the Group affiliates, we were able to launch “Hana HAP” in November 2021, the industry’s first MyData brand.

    Offering personalized solutions based on customer data collected from diverse databases in Group operations, ‘Hana HAP’ is establishing itself as a trusted MyData service brand. In recognition of its distinctive services and consistent customer communications, it was selected as the “Top-ranking Brand Power of 2022”. As a product of the Group affiliates’ strengths in their respective fields, such as wealth management of Hana Bank, expenditures management of KEB Hana Card, investments of Hana Financial Investment, and digital DNA of Finqq, Hana HAP will share and connect services of the Group affiliates. It will enable us to develop specialized products and conduct marketing at the Group level, thereby raising the level of satisfaction that customers feel about their financial lives.

    Launching “iBOOJA”, a financial platform for Generation Z

    Hana Bank launched “iBOOJA”, a financial app, in June 2021, through which parents and children can communicate and experience finance together. The app is a financial platform designed to help children gain diverse first-hand financial experiences conducting various transactions with digital allowances from their parents, develop good financial habits, and grow into able members of society. An app account can be opened by children 13 and younger after a simple verification requiring a parental consent. Featuring various fun factors for children, the app secured around 400,000 Generation Z customers in only six months in operation.

    Branch innovations following a digital transformation

    Branch customers are on a decline owing to the popularity of mobile banking and the spread of COVID-19. Rather than merely reducing its branch network through integration or closure, Hana Bank is increasing channel efficiency by creating omni-channels, relocating branches, and adopting new channels.

    Upon completion of a digital channel combined of finance and distribution established in partnership with BGF Retail, Hana Bank set up a Smart Self Zone at a convenience store owned by the partner. The first store selected for the Smart Self Zone service has no bank branch or ATM within the 500-meter radius of the store, enabling the Bank customers to conduct some 50 types of banking transactions, including account opening, passbook renewal, and debit/credit card application. The store is also equipped with a Smart Teller Machine (STM) for virtual assistance. Meanwhile, for the elderly and other customer segments of the financially marginalized who find digital banking too complicated, Hana Bank transformed ten branches into mini branches rather than closing them in 2021, offering a new customer experience and practicing the unchanging value of humanism.

    PROCESS INNOVATION Hana Financial Group pushed forward robotic process automation (RPA) and other work streamlining projects in 2021, which resulted in cost reductions, productivity improvements, and other positive outcomes. Hana Bank automated a total of 80 tasks that required some 1.5 million cumulative man-hours a year. In 2022, with the annual goal of saving 1 million man-hours, the Bank will continue to expand its RPA projects by applying new technologies, such as AI chatbot, cognitive technology, and machine learning. Hana Financial Investment adopted RPA in 2019 and has automated a total of 57 tasks by the end of 2021, saving some 230,000 cumulative man-hours. The company is working on a new RPA project with the goal of automating 12 tasks in the first half of 2022 and thus saving its employees 110,000 hours of work. KEB Hana Card, which had begun adopting RPA in 2019 with a focus on repetitive manual tasks, has since automated 51 types of work by the end of 2021, thus saving 38,448 cumulative man-hours. Hana Capital, which launched its first RPA project in 2018, has automated 74 tasks and reduced man-hours by 400,000 hours by the end of 2012.

    In 2021 alone, Hana Capital reduced operation expenses by KRW 2.8 billion through RPA. Hana Life focused on automation of internal tasks and thus saved 1,184 man-hours which translates to around KRW 352 million in reduced personnel costs. Hana Savings Bank focused on automating document receipt, reducing the annual number of man-hours required for the task to 320 hours, a reduction of 80 hours. It also automated the processes of responding to customer inquiries and requests regarding their financial transaction information, thus reducing the yearly number of required man-hours from 1,092 to around 800 hours.

    We also expedited the adoption of Smart Lounge and the expansion of digital authentication system. Hana Bank, having adopted a smart teller system in 2018 as part of the digitalization of branch operations, in 2020 built a digital system by which customers can fill out necessary forms while waiting for the bank teller service. The Bank in 2021 adopted the Smart Lounge text-to-speech (TTS) system for the digitally challenged as part of its digitalization of branch services. Also, by keeping a digital record of all investment product characteristics customers have specified in their writing through Smart Lounge, the Bank preempts incomplete sales and digitalizes internal controls at the same time.

    BUILDING DIGITAL ECOSYSTEM We are further expanding alliance and investments with startups possessing platforms and services that can generate new customers. A leading case in 2021 is Lucent Block. A fintech startup specializing in property technology, Lucent Block was chosen as a member company of “Hana 1Q Agile”, Hana Bank’s startup nurturing program, in 2021 and as part of the program, developed opportunities together with the Group affiliates to collaborate through investment. Lucent Block’s blockchain-based, real estate-backed securitization service has received approval from the Financial Services Commission as an innovative financial service. Lucent Block is preparing for launch of the service together with Hana Asset Trust as the issuer of the beneficiary certificates and Hana Financial Investment as the manager of nvestor deposits. Hana Bank has made a KRW 1 billion equity investment in Lucent Block.

    Going forward, we will continue to combine such services as edutech, health care, proptech, payment, and styletech with finance in a bid to provide our customers with more convenient, distinctive services. In addition, we will quickly identify and analyze market trends, needs of digital natives, and NFT, and then discover startups with innovative ideas and technologies in relevant areas and support their growth by linking them with relevant business departments of Hana Financial Group.


2022 PLANS
  • Platform-based big tech companies are accelerating their expansion into the financial industry as well as growth in other business areas. In an era of rapid change and intensified competition, Hana Financial Group will implement three strategies – innovate consumer experience, expand value chains, and lead new digital business – on the back of strengthened infrastructure of key digital capabilities, all of which will be more quickly achieved through a core value called “Digital First”.

    First, innovating consumer experience will start with customers at the center at all times. To this end, we will build an AI-based futuristic contact center and strengthen digital customer management by advancing mobile platforms through level-up of UI/UX capabilities.

    Second, expansion of value chains will take place through strengthening of cooperation and connectivity. We will consolidate payment platforms into 1Q Pay, and thus strengthen the Group’s payment platform, and through Hana 1Q’s daily life-focused contents, we will expand our platform business, including mobility, real estate, health, and travel. Also expanded will be strategic investments in establishing non-financial ecosystems and increasing new customer contact points.

    Third, we will strengthen technology-based operations by leading in new digital business. To this end, we will bolster collaboration with startups by linking them with the Hana 1Q Agile Lab and fast-track the whole process, from discovery to commercialization of AI, block chain, and virtual asset and other new technology-based businesses, while strengthening industry-academia collaborations.


LEADING DIGITAL ABCD
  • Hana Financial Group is widening the scope of innovation and cooperation to stay in the forefront of “ABCD” (AI, blockchain, cloud, data) technologies which will shape digital transformation for years to come.

    AI-BASED DIALOGUE-TYPE PLATFORM AICC PROJECT With the growing use of non-face-to-face channels and the advancement of digital technologies, customer care centers are expanding to accommodate customer requests including related services, utilizing customer contact points. To lay the foundation for a futuristic customer contact center, Hana Bank and KEB Hana Card together have been working on an Artificial Intelligence Contact Center (AICC) project since November 2021, with a plan to gradually open the service starting in April, 2022.

    BLOCKCHAIN RESEARCH POC THROUGH JOINT RESEARCH PROJECT WITH POSTECH In preparation for Korea’s adoption of a central bank digital currency (CBDC), Hana Bank conducted joint research in 2021 with POSTECH, in a form of industry-academia cooperation, completing the verification of technologies for all scenarios expected to take place following a CBDC adoption as well as the development of a proof of concept (PoC) for a CBDC operating system. In addition, the Bank continues to invest in companies with a competitive edge in blockchain technology and blockchain-based investment platform business, taking measured steps to enter blockchain and NFT-based business.

    CLOUD COMPUTING AT THE GROUP LEVEL As part of our digital transformation drive, we have been working on a Group-level transition to cloud computing since 2018. Focusing on five key execution tasks – establishing cloud governance, building a Next Cloudia, expanding hybrid cloud operations, advancing the hybrid cloud infrastructure, and implementing cloud governance – we achieved a 78% Unix-to-Linux (U2L) transition and a 15% cloud transition by the end of 2021. Our plan for 2022 is to expedite the Group’s cloud transition through adoption of more aggressive execution strategies and improvement of cloud services.

    DATA ANALYSIS PLATFORM (BIG DATA) In 2021, Hana Financial Group adopted SAMPL2.0, an analysis solution jointly developed with the Advanced Institute of Convergence Technology as a way to change our big data analysis platform from the existing Rancher-based to a more advanced Kubernetes-based platform. The solution is expected to contribute to improving system stability, to enable the use of big data-based AI, and to help expand the analysis work. By internalizing new technologies at the Group level, we were able to build an environment in which customizing becomes easier going forward.