[INTERVIEW] NongHyup bolsters digital innovation

NongHyup Bank CEO Lee Dae-hoon / Courtesy of NongHyup Bank

Bank carries out two-track strategy for platforms, Southeast Asia

By Park Hyong-ki

NongHyup Bank will carry out a "two-track digital strategy" for its two mobile banking platforms, said Lee Dae-hoon, the bank's chief executive.

NH Smart Banking is for the general public, especially the elderly.

And All One Bank is for young people, who not only seek to use mobile banking services, but also access and experience nonfinancial content.

Because of the two platforms, NongHyup said it was not interested in applying for a mobile internet banking license.

But before it can further beef up the two, Lee said it will take more than just strengthening its computer programmers, engineers and data analysts unit.

Everybody at every department will need to change and develop their digital skills if NongHyup wants to succeed in carrying out the two-track mobile strategy and become a "true digital company," Lee said.

"We need to change into a fast and agile organization that can help spur innovation with the use of technology," Lee told The Korea Times in a written interview.

"This is where our digital R&D center comes in to push NongHyup Bank's digital transformation."

The bank opened an innovation campus that encompasses the R&D center and a startup center in Yangjae-dong, Seoul, in early April.

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The campus will not only have 1,000 data scientists, but also house more than 30 startups experimenting and commercializing their ideas using technologies such as artificial intelligence, blockchain and cloud computing.

NongHyup has forged ties with Seoul National and Dongguk universities in big data and blockchain as part of its long-term plan to develop and offer customized services through its platforms and startup ecosystem.

Above all, the campus will serve as the control tower, which will push not only NongHyup Financial Group and NongHyup Bank, but also all subsidiaries including NH Investment & Securities and NH Capital to embrace innovation and "run like a startup."

Having this culture is very important to achieve digital transformation, Lee said.

"Lowering the walls between departments, having flexibility and encouraging collaboration through alliances are key to developing a digital organization that can rapidly move and respond to external changes," he said.

NongHyup Financial Group and some of its key subsidiaries including NongHyup Bank and NH Investment & Securities have together launched a 20 billion won ($18 million) fund to invest in startups inside the campus.

They will be holding events and competitions on collaborative computer programming, showcasing their business models in front of investors, as well as teaming up with NongHyup subsidiaries in financial technology, Lee noted.

"NongHyup Bank will focus on solving customers' problems with those startups. This is where our innovation will begin," Lee said.

NongHyup Bank CEO Lee Dae-hoon, center back row, poses with employees after holding a program on digital innovation at the bank's headquarters in Seoul, April 19. Courtesy of NongHyup Bank

Southeast Asia expansion

The chief executive also said the bank will carry out a two-track strategy for Southeast Asian expansion.

NongHyup Bank has categorized Vietnam and Indonesia as high growth markets.

Cambodia and Myanmar are NongHyup's high potential markets.

The bank will be implementing its strategy in accordance with such regional classifications.

"Our priority is making further inroads into the high growth markets in Southeast Asia," Lee said.

NongHyup seeks to establish its Southeast Asian base in Vietnam where its office has turned into a branch. It will concentrate on boosting its sales there, he added.

The bank will not hurry, but take its time to build its presence in Indonesia where entry barriers are high.

"We are looking at Indonesia with a long-term perspective. If we find attractive targets there, we will pursue acquisitions as part of efforts to enter the region," Lee said.

"We have a partnership with Vietnam's Agribank in overseas wire transfers for those who do not have accounts at both banks. We also have human resource exchanges. But we are definitely open to expanding our ties in other financial and technology fields."

In Cambodia and Myanmar, NongHyup Bank will boost microfinancing operations there.

NongHyup Bank acquired Cambodia-based SAMIC last year, and renamed it NH Finance Cambodia. This marked its first overseas acquisition.

"We are planning to turn NH Finance Cambodia into an agricultural commercial lender, from a microfinance institution within five years," Lee said.

NH Finance Cambodia has 19 branches, and it plans to set up two more and introduce new loan products and services this year in an effort to become a lender for farmers.

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