The 'group savings account', known as a cash cow for internet-only banks, is being adopted by commercial banks and savings banks. Group savings accounts do not require significant expenses in product development and management but can secure low-cost funding from multiple customers at once, drawing interest from the financial sector that needs to prepare for a decline in interest rates.
According to the financial sector, Shinhan Bank plans to launch the 'SOL group savings account' in mid-next month. Currently, Shinhan Bank is conducting a notification application event through its application (app), attracting attention as more than 90,000 customers participated just two days after the event began on the 21st. Shinhan Bank, which launched a dedicated app for group savings accounts in 2011, had suspended the service due to low usage rates but plans to reintroduce the service with a savings account feature, the first of its kind for group savings accounts.
KB Kookmin Bank, which previously operated group savings accounts but had low usage rates, added a parking account feature with an interest rate in the 2% range in the second half of last year to activate the service. Woori Bank introduced a group savings account feature with the revamp of its banking app in November last year, while Hana Bank is operating a group savings account that offers cash back when using a dedicated check card. NH Nonghyup Bank is also providing a group savings account linked to its banking app.
Savings banks are also getting involved. The Korea Federation of Savings Banks is currently building a group savings account system, aiming to launch the service in the first half of this year. Once the system is in place, it will be possible to subscribe to group savings accounts from various savings banks through the integrated app. Out of 79 total savings banks, 66 will provide group savings account services using the same program employed by the Korea Federation of Savings Banks' IT system. For the remaining 12 savings banks, direct subscription through the app may not be feasible, but they can introduce their products.
The entire financial sector is getting involved in group savings accounts due to low-cost deposits. Recent results from banks indicate that their net interest margin (NIM) has decreased due to falling market interest rates, and with expectations of continued rate declines this year, defensive measures have become urgent. This is why group savings accounts, which can draw in low-cost deposits at lower rates compared to regular savings and deposit products that offer relatively high rates, are receiving attention. Additionally, there is an expectation for benefits from attracting new customers through invitations to group savings accounts and increasing app usage rates.
However, it does not seem easy to penetrate the group savings account market already tightly held by three internet banks. The group savings account offerings from these three internet banks continue to grow rapidly. KakaoBank, which was the first to launch a group savings account, leads the pack, with a balance of 8.1 trillion won as of the third quarter of last year, marking a 31% increase compared to the same period the previous year (6.2 trillion won).
The number of customers using KakaoBank's group savings accounts has also significantly increased. During the same period, the number of users rose from 9.5 million to 11 million, an increase of 1.5 million over the year. Kbank, which started its group savings accounts somewhat later than KakaoBank, also saw its group savings account balance more than double at the end of last year compared to the previous year, while Toss Bank's group savings account loan balance increased by over 100 billion won compared to the same period the previous year. Commercial banks plan to attract customers with services not provided by internet banks, such as savings accounts and cash back functions.
A source at a commercial bank noted, "Banks that need to maintain profitability during declining interest rates are strengthening their group savings account services to secure low-cost deposits. However, since internet banks have already seized the group savings account market, banks entering as latecomers are likely to be contemplating differentiation strategies to gain competitiveness."