Due to sluggish credit sales, credit card companies are considering future business development and are beginning to expand their operations using big data in various ways. The companies are devising methods to generate revenue by selling the vast amounts of data they have collected or by processing the data to develop customized products for individual consumers or for marketing purposes.
According to the credit card industry on the 9th, Shinhan Card has recently signed a business agreement to expand its member companies for Grande Data, the country's first private data dam project, and has begun expanding its domestic and international data business. Grande Data was launched in 2021, centered around Shinhan Card, SK Telecom, and KCB. With this agreement, Kakao Mobility and Emart have been added. For Shinhan Card, it has become possible to utilize new types of data from mobility and distribution in addition to existing customer data.
Shinhan Card, which established a data-related organization in 2013, recorded over 14 billion won in revenue from data in 2023 and elevated the organization from a team to a headquarters last year. At the annual general meeting of credit card companies this year, the main topic was the amendment of bylaws to include data business in the business purpose, and Shinhan Card also added corporate information inquiry services to its business purpose at the general meeting on the 25th of last month.
Samsung Card also amended its bylaws during its general meeting on the 20th of last month to include the same content. Corporate information inquiry services analyze transaction histories and credit transaction capabilities of corporations and provide this information to financial institutions. Credit card companies can provide credit evaluations and loan examination materials for small businesses based on the payment data of merchants, generating revenue. Samsung Card plans to offer customized solutions such as sales estimates and customer consumption pattern analysis through data analysis that combines payment data and merchant credit information this year.
Hyundai Card has developed data-driven artificial intelligence (AI) software and is exporting it to Japanese credit card companies. By defining and structuring data with "tags," it is possible to predict individual behaviors, tendencies, and states. Tags can be applied across all areas of business regardless of industry. BC Card, which received designation as an innovative financial service in corporate information inquiry services first among credit card companies in May last year, is currently supplying credit analysis data for small business merchants to major financial institutions like Kbank and is also utilizing data for its corporate credit loans.
The credit card industry has been trapped in a sluggish economy for several years. According to provisional data published by the Financial Supervisory Service regarding the operating results of credit finance companies last year, the net profit of full-time credit card companies was 2.591 trillion won, an increase of 0.3% (8.7 billion won) compared to the previous year. This is virtually stagnant. However, due to the economic downturn and sluggish credit sales, asset quality is deteriorating. As of the end of last year, the delinquency rate rose by 0.02 percentage points to 1.65%, the highest level recorded in ten years since 2014 (1.69%), while the ratio of non-performing loans increased to 1.16%, up 0.02 percentage points from the end of the previous year (1.14%).
Credit card companies have been aiming to enter the corporate information inquiry business as a new venture, but there have been limitations to their expansion. This is because corporate information inquiry services are not included in the permissible concurrent operations. However, in December last year, the Financial Services Commission amended the enforcement decree of the Specialized Credit Finance Business Act, adding it to the concurrent operations of credit card companies starting this year. Consequently, credit card companies can now analyze the payment data of merchant corporations for loan examination materials or sell it to other financial institutions.
There are expectations in the credit card industry that the vast amounts of merchant data held by credit card companies could become a new source of revenue. A source from one credit card company noted, "Originally, credit card companies have had the capability to extend credit evaluations to corporations and expand into new businesses, which is significant," adding, "However, it’s just recently that they amended their bylaws to add this as concurrent operations, and long-term investment is needed for corporate information inquiry services to progress to a monetization stage."