Shinhan Bank’s Product Development Team

Bank products are the point where banks and customers meet.

Banks offer two or three deposit products, loan products, and index funds in a month. Even seemingly simple deposit products go through marketing and trend research before being introduced in the market. How are those products made?

In a meeting room of the product development department of Shinhan Bank in Taepyeong-no, Jung-gu, Seoul, nine employees are having a heated discussion on a new deposit product on the morning of July 25.

“As this product is targeted at housewives, a health checkup should be included. That is also in line with the well-being trend.”

“Doesn’t that have the product look complicated? That’ll compromise profitability.”

“No. Housewives these days are very health conscious. I think it’s better to include it.”

Yoon Tae-woong, the vice head of the department who is in charge of product planning, said. “Bank products are also the product of individual experience,” adding, “Although we take profitability into consideration, it is important in the planning stage how much current trends are reflected.”

Shinhan Bank established its product planning department by splitting its larger product development division in January 2003 for the first time as a Korean bank. The move was intended to create a synergy by gathering experts in extending and receiving credit, foreign exchange, and derivatives. It is such a secretive department that even those with bank pass cards cannot enter the department without knowing the password.

Their efforts to reflect trends are expressed in various forms.

The department collects staff members’ ideas by establishing a company idea board called the “Edison board.” Yoon reads dozens of consulting reports and newspapers everyday. It also studies products from other banks. They receive advice from a selected group of 120 customers and 24 employees. Yoo Yoo-jung, the manager in charge of derivatives, checks the stock price index of every country and raw materials and gold prices daily.

In fact, the cost of developing a bank product is not so big because it is an intangible product. However, that causes much stress.

Yoon said, “It would have been better if we were developing tangible manufactured goods.”

As there are various types of banks products and heated competition these days, it is hard to meet sales goals. For example, it took less than a month to sell one trillion won worth of time deposit products four years ago. Today, however, receiving credit products or loan products are pushed down on the list, as banks sell insurance, investment trust products, and card products in addition to deposit products.

Offensives from foreign banks, such as Citibank Korea and SC Korea First Bank, are fueling competition as well.

However, Choi Jae-yeol, head of the product development department, expressed his confidence, saying, “We have better know-how in the Korean market,” adding, “I’m afraid that our secrets might leak.”

Yoon checks products under development and studies current trends in the morning and meets people outside the bank in the afternoon.

Last week, he met a realtor who proposed to jointly develop a product, saying that rental apartments do not sell, and a government official who wanted to utilize Shinhan bank’s know-how in product development for government policies.

It takes about three months to introduce a product from an idea. But a success of a product depends 70 percent on management and marketing efforts after its introduction.

“You should always keep your ears open and talk about products often because you stumble onto new ideas while you are talking about them. That makes me go home with a hoarse voice.”

Sun-Woo Kim Ji-Wan Cha sublime@donga.com cha@donga.com