IBK strives to attract new credit card subscribers by developing innovative products catering to diverse customer needs, and upgrading major products and services to strengthen its retail banking business. The Bank has added to its roster of corporate clients with the Taxbill Card product, which provides electronic invoicing and VAT refund services. As a result, the Bank recorded annual growth of 7.1% in customer numbers and 13.1% growth in card purchases during 2010.
IBK is a member company of BC Card, with an equity
share of 4.95%. Among the 11 member companies, IBK
has a 14% share of BC Card’s subscribership, and 14.5%
of its billings. IBK has been expanding its market share by
adding differentiated new products to its portfolio.
IBK Style Card is one of IBK’s flagship products. It was
designed with customizable features, allowing cardholders
to select among gas stations, supermarkets, academic
institutions, medical services, etc. for special discounts.
Following its launch in January 2010, account numbers
surged to 307,755 by year-end. The Bank has other cards
developed to serve various consumer niches: Mile Story
Card offers a combination of cash-back service and
discounts for purchases from GS business group (82,072
accounts); hi Card provides discounts on public transit
fares (46,073 accounts); and APT Premium Card offers
unprecedented discounts on living expenses (16,918
accounts). IBK’s wide variety of specialized credit card
products has contributed to solid growth in IBK’s market
On the marketing front, IBK has stood out among
domestic financial groups for the creativity of its
advertising and on-and-offline marketing campaigns. It
also strived to increase product cross-sales among the
Bank’s core customers to secure its competencies.
IBK recorded the domestic banking industry’s lowestever
delinquency ratio in 2010, thanks to the strong
risk management that the Bank touts as one of its
key competitive advantages. It expanded the scope
of its risk monitoring systems across the full range of
corporate to individual card customers. Using preemptive
screening methods to prevent the acceptance of highrisk
subscribers, the Bank was able to report a year-end
one-day-and-over delinquency ratio of just 1.53%, which is
0.46%p lower than in the previous year.
For its corporate customer base, the Bank operates
a rigorous CRMS (Card Risk Measurement System)
to carry out multivariate risk modeling incorporating
a comprehensive array of risk factors including asset
soundness, profitability and business growth prospects.
Going forward, IBK will manage credit card risk proactively
by strengthening its regular risk monitoring system.
IBK expects 2011 to be a challenging year in the domestic
card industry, as the competition from pure-play credit
card companies becomes fiercer and various card
companies spin off from banks. Under the circumstances,
it will pursue competitiveness by continuously launching
new products and supporting them with creative
advertising and marketing campaigns. It will also cement
the loyalty of its existing subscriber base with VIP
programs and giveaways that encourage increased card
usage. Its card unit has targeted KRW 20 trillion in billings
in 2011, a goal it will pursue using a marketing strategy
that targets especially corporate customers using multiple
IBK is dedicated to development and cross-selling of insurance products to fulfill customer demands for various financial services as well as highly functional products that reflect customer needs. It secures higher profit margins than its competitors with sales of long-term products such as IBK Annuity and coverage insurance, which account for 13.2% of the Bank’s non-interest income, thus making a significant contribution to total profitability. In particular, as of the end of 2010, the Bank exceeded its upwardlyadjusted revised premium target of KRW 60 billion by 125%, collecting total premiums of KRW 75 billion.
IBK created a new subsidiary in September 2010, ‘IBK Insurance.’ It is the Bank’s insurance subsidiary, specializing in pension insurance. Together, they provide a variety of pension insurance products to safeguard the financial stability of customers’ retirement years in Korea’s rapidly aging society. They are also training their sales staff to provide professional consulting services on post-retirement life planning and insurance remodeling, while building their competency in pension insurance in general.
IBK protects the rights and financial security of its customers and reaffirms its substantial management by operating the Insurance Subscription Blocking system, which guides it in proposing insurance products for individual customers that are appropriately priced for their respective payment capabilities. The Bank continues its efforts to maintain life-long relationships with its bancassurance customers by supplying transparent information on insurance agreements and providing ongoing customer service befitting the features of respective insurance products.
2010 was a year of massive repurchases as customers who had subscribed to funds during the peak years of 2007 and 2008 recovered their principals. The fund market in the banking sector is therefore anticipating a dynamic rebirth in the coming years. As such, IBK is expanding its market share by providing differentiated services and expanding its range of installment funds, and thereby securing a more stable and diversified profit base for the Bank.
The Bank introduced the IBK Fund Care Service for fund subscribers last September, with the aim of improving customer satisfaction by providing systematic services related to funds. The ‘500-letter Fund Report’ is a service offering simple explanations of fund investment options to help easy understanding, and has been well-received by the Bank’s customers. The Report includes essential fund information such as historic yield, investment strategy and performance analysis, as well as general fund investment advice.
To build internal competencies, the Bank conducted a training program at 304 bank branches called ‘Together with Neighbor Branches for Funds.’ Despite the overall market environment in which massive repurchase occurred, IBK took steps to raise its market share and deposit volume. Thanks to these efforts, its market share for deposit volume and the number of fund investment accounts increased by 8.0% and 8.1%, respectively, during 2010.
Moreover, in conjunction with IBK Investment & Securities, the Bank introduced the IBK Stock Investment Account, through which customers can manage their stock trades using a single bankbook without having to open an additional securities account. It removes the earlier inconvenience of having to first transfer money from a deposit account to a securities account before acquiring securities. This has created excellent sales synergies, boosted fee income and raised deposit levels. It is well received by the market thanks to its added benefits, such as MMDA interest and fee exemptions.
Another popular new product is e IBK Savings & Funds, a first-of-its-kind hybrid product and winner of the 2010 Korea Financial Innovation Award. With sales of KRW 29,808 million and 28,691 accounts as of December 31, 2010, this is rapidly becoming a market-leading product that meets customer demands for an innovative solution offering the stability of time deposits and the yield potential of funds.
The regulatory framework has recently been altered to strengthen the financial protections on retirement benefits of workers. Retirement benefits are now able to be deposited to stable financial institutions for their sound management, resulting in a sharp spike in growth of the retirement pension market. In this context, as of December 31, 2010, IBK has a market share of 5.9%, the highest among the 56 domestic financial institutions that sell retirement pension products. The accumulated benefits on the Bank’s books recorded a net annual increase of KRW 1,088 billion in 2010 to close at KRW 1,749 billion. The number of corporate subscribers also rose sharply, increasing by 12,116 companies to total 22,091 by year-end. Individual subscribers joined in large numbers in 2010, as the Bank signed 173,308 new individual customers to reach 347,793 subscribers in total.
Driven by the recent changes to the Employee Retirement Benefit Security Act, along with the increasing adoption of retirement pension plans by small companies with four or fewer employees, the domestic retirement pension market is projected to grow rapidly in the near term. Under these market conditions, IBK will aggressively pursue an increasing share of this market by leveraging the organic growth of its retail customer base, as well as its unparalleled connections to the SME sector and corporate customers.