Shinhan Bank Japan Attracts $1.09 Bln in 5 Months

Advancing into foreign markets is a pressing task for Korean banks. Going beyond the saturated domestic market to enter those abroad and create new income sources is a matter of life and death for these banks.

Shinhan Bank Japan has attracted 100 billion yen (1.09 billion U.S. dollars) in capital since its launch in September last year. The figure is considered impressive in that a foreign-based bank that advanced to Japan for the first time has succeeded in an advanced market.

More importantly, 80 percent of the savings have been deposited by Japanese customers.

Korean banks usually enter foreign markets by targeting ethnic Korean customers. Because of this, dispatched staff often cannot speak the language of the host country.

This results in cutthroat competition since many Korean banks doing business abroad primarily focus on the limited number of ethnic Koreans. By succeeding in Japan, Shinhan has defied the stereotype that Korean banks target only ethnic Koreans abroad.

Analysts say Shinhan’s success stems from its focus on retail banking and thorough localization. Seven of the Korean bank’s 10 overseas affiliates are concentrated in Asia. Of its 34 overseas branches, 20 are in China, Japan and Vietnam.

Shinhan is centering on the Asian region, which holds strong growth potential and shares a similar culture, but seeks to localize operations by hiring native staff and conducting far-reaching activities of corporate social responsibility.

Notably, experts say the bank has exported its ample retail banking knowhow, including products for joint purchase via the Internet, and world-class integrated products. Fast processing and customer satisfaction also constitute key elements of Shinhan’s success in overseas operations.

This is similar to the growth strategy of Banco Santander SA, Spain`s largest bank. Santander, which ranked sixth in Spain until the mid-1980s, has emerged as Europe’s top bank after 20 years thanks to its strong retail banking capacity and advance into Latin America, a region that shares a cultural similarity with Spain.

Shinhan’s success has laid the foundation for other Shinhan Financial Group units to step up their advances into foreign markets. Notably, these affiliates are expected to target Japan, Vietnam and China, where Shinhan Bank’s affiliates have flourished.

The group’s credit card, insurance, securities and asset management units will offer general financial services to the non-Korean customer base in Japan, Vietnam and China.

Through this strategy, Shinhan Bank will continue consolidating its status as a commercial investment bank offering the combined services of retail and investment banking abroad in the long term.

weappon@donga.com