Dominating the Non-Face-to-Face Small Business Loan Market... Expanding the Territory of Inclusive Finance [Local Banks' New Survival Strategy]

Jeju Bank is advancing as a 'National Digital Bank'. It plans to enter the non-face-to-face loan market targeting small businesses and SMEs nationwide in partnership with Douzone Bizon.

Douzone Bizon will become the second-largest shareholder of Jeju Bank instead of the fourth internet-only bank, embarking on a joint venture. Douzone Bizon is the No. 1 enterprise resource planning (ERP) company, strategically invested by Jin Ok-dong, chairman of Shinhan Financial Group, during his tenure as Shinhan Bank president.

Jeju Bank plans to strengthen profitability by supplying corporate loan products based on the data of Douzone Bizon's SME and small business member companies, which number around 3 million. Jeju Bank's digital bank challenge serves as a test bed at the group level, and if successful, it is expected to expand to Shinhan Bank, a core affiliate of Shinhan Financial.

Moreover, Jeju Bank has proactively announced its inclusive finance plan of 'reinvesting the profits earned as a digital bank into the Jeju region', aiming to lead the era's task of 'coexistence finance'.

According to the financial sector on the 27th, Jeju Bank plans to quickly enter the non-face-to-face small business loan market to achieve the goal of becoming a 'SOHO specialized bank' by 2027. As commercial banks, existing internet-only banks, and the fourth internet-only bank turn their eyes to the non-face-to-face small business loan market, Jeju Bank plans to 'dominate' the market 2-3 years ahead.

A senior official at Jeju Bank said, "Jeju Bank's vision is to preemptively dominate the market as a small business specialized bank," adding, "It will become a national digital bank beyond Jeju."

Jeju Bank is actively reviewing the 'sub-bank' strategy to dominate the non-face-to-face SOHO loan market. By analyzing the cash flow of about 2.3 million small business and small business corporations and about 700,000 SMEs owned by Douzone Bizon, it plans to propose customized loan products needed by them, thereby establishing its position as a sub-bank while aiming to become the main transaction bank.

Without the need to prepare separate documents, transactions are conducted through non-face-to-face channels, speeding up corporate loan approvals. A Jeju Bank official explained, "If the data owned by Douzone Bizon is integrated into the bank, real-time cash flow and transaction information can be viewed," adding, "By providing the short-term funds they need, we will first play the role of a sub-bank, and in the future, we can become the main transaction bank."

Since Jeju Bank holds a banking license, it can start the transition to a digital bank without going through the process of obtaining bank approval, which is also an advantage.

According to Jeju Bank's task force (TF), it plans to launch customized loan products and start new business as a digital bank as early as January next year, or at the latest within the first quarter. Until then, it plans to develop non-face-to-face credit evaluation models and loan products for small businesses and small business corporations, and SMEs, and complete the construction and linkage of the computer system to become a digital bank.

The TF, consisting of about 30 members, includes dispatched employees from Shinhan Financial Group. As Jeju Bank's transition to a digital bank is a strategic decision at the group level, the holding company is directly supporting it.

Multiple senior officials at Shinhan Financial said, "When considering the challenge of the fourth internet bank and Jeju Bank's transition to a digital bank as Plan A and Plan B, respectively, it was comprehensively decided which option would be a better choice for Shinhan Financial and how to differentiate Jeju Bank to save it."

Jeju Bank plans to continue face-to-face business for Jeju residents as a 'two-track' strategy along with the transition to a digital bank. Jeju Bank has presented the principle of 'inclusive finance within innovation', supporting local and mid-to-low credit SMEs that have been excluded from funding, and reinvesting the profits secured by advancing as a national digital bank into revitalizing Jeju's regional finance. A senior official at Jeju Bank emphasized, "Inclusive finance is the role and responsibility that Jeju Bank, as a local bank, must fulfill."

gogosing@fnnews.com Park So-hyun, Lee Ju-mi reporters