Korea’s Shinhan grew cross-sell as well as scale with LG Card acquisition
Achieving back office and operational efficiencies allowed Shinhan to focus on building a more pervasive credit card proposition across multiple services. May 05, 2011 | ResearchSouth Korea’s credit card market is very saturated. According to the statistics of Daewoo Securities of Korea, economically active Koreans have 3.5 credit cards per person. Therefore, the race for bigger market share is becoming tougher. In 2006, Shinhan’s credit card operation had five million customers, while LG Card’s boasted 10 million customers. The initial cross rate-between after the merger in 2007 of Shinhan Bank and LG Card was less than 15%. This means only 1.5 out of 10 LG card customers were also Shinhan Bank customers. The biggest challenge therefore was to bring the cross-sell rate up and acquire former LG customers for Shinhan Bank. After the deal, Shinhan Card (SHC) became the largest credit card operator in Korea, with a market share of over 25%. SHC’s strong market position is backed up by its more than 13 million customers, representing almost 50% of the economically active population in Korea. SHC keeps LG Card‘s competitive edge not only in credit cards but also in instalment financing, corporate leasing services and loans tailored for students, taxpayers, newlyweds, along with its flagship products such as the Lady Card (for women), 2030 Card (for men in their 20s and 30s), and the LG Oil Card (with mileage points and gas station discounts).The broad customer base and its associated data benefits SHC’s marketing activities and provide a solid foundation for its risk management system. SHC enjoys good profitability supported by a low fixed cost burden. The company’s ratio of annualised pre-provision operating profit to managed assets was about 6.5% in June 2009, due to its relatively low marketing and sales costs thanks to synergy with other subsidiaries under the group. In return, the group has not only intensified its focus on strengthening credit card operations but also improved cross-selling opportunities and revenue diversification for the organisation as a whole. After the acquisition of LG Card, Shinhan ... Please login to read the complete article. If you already have an account, you can login now or subscribe/register.
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