Banking groups boost car finance to attract young drivers

South Korean banking groups began upgrading their car loan and finance services to the next level this year, aiming to go beyond their traditional businesses to create lifestyle platforms.

KB Financial Group, the nation’s No.1 banking group by total assets, has expanded its auto finance services offered through online and mobile platforms, primarily through its KB Capital leasing and installment finance unit .

On January 4, KB Capital signed an agreement with Volvo’s electric vehicle brand, Polestar, which allows customers to choose the type of car and financing they want on the same online platform. The quick and easy service – which takes just 60 seconds to complete according to KB Capital – is the first of its kind between an automaker and a financial institution here.

KB Capital also renewed its contract with Jaguar Land Rover Korea, the British car brand’s local importer, earlier this month, offering exclusive services to customers. Long-term car rental services, 72-month loan offers and interest-free deferred payments for certain models are the main benefits to be offered.

KB has also adopted the government-led financial data service technology “MyData” on its KB Chachacha used car finance mobile platform. The integration will allow users to see their auto loans and installments as part of comprehensive financial data of their expenses, bank account balances, loans, insurance and more, allowing customers to manage their finances more efficiently.

An online and mobile car finance platform operated by KB competitor’s credit card issuer Shinhan is set to get an upgrade this year due to its popularity, the company said earlier this year. this month. Shinhan Card’s car finance platform MyCar said in December that its average monthly users jumped 215% to 600,000 from 190,000 year-on-year during the cited period.

Millennials and Gen Z customers accounted for 47 percent of MyCar users, Shinhan Card said, indicating that a new generation of customers prefer online car finance services over face-to-face services.

As evidenced by the case of Shinhan, more and more customers prefer to buy cars with credit card installments.

At the end of September last year, customers of the six major credit card issuers here – Shinhan, KB Kookmin, Woori, Samsung, Hana and Lotte – paid a total of 9.7 trillion won ( $8.1 billion) with corporate cards to buy cars. , according to the latest data from the Financial Monitoring Service. This figure is 13.1% higher than the 8.6 trillion won in 2020 and more than doubled from the 5.4 trillion won posted in 2017.

The main subsidiaries of banking groups are collaborating with each other or with startups to better respond to customers looking for in-depth car financing services.

Woori Financial Group’s flagship banking unit, Woori Bank, recently entered into an agreement with Woori Card and Woori Financial Capital to launch the comprehensive online and mobile car finance platform Woori One Car.

In December, Hana Bank partnered with Cardong, a car appraisal platform here, to add appraisal services to its car finance services. Through its existing Hana 1Q mobile app, its users can calculate the value of the car they want and receive information about various tax credits and other financial assistance.

By Jung Min-kyung ([email protected])

Amanda P. Whitten