Banks are competing to secure low-cost deposits. They are launching collaborative accounts with retail brands or organizing events for group accounts, attracting low-cost deposits in unique ways. Banks refer to low-cost deposits as 'cash cows' or 'core deposits' and are strengthening their related businesses.
According to the financial sector on the 22nd, KB Kookmin Bank will enter into a business agreement with SSG.com in June to begin developing dedicated financial products. Accounts that can be opened at SSG.com, Emart Mall, Shinsegae Mall, and Shinsegae Department Store websites are expected to be released. Kookmin Bank has already seen significant success in attracting new customers and deposits with its collaborative account products. Last month, it launched exclusive products in collaboration with Starbucks and Monimo, gathering 280,000 new customers from the two products.
Elsewhere, competition for group accounts is fierce. Shinhan Bank launched a new group account in February this year and has named singer Cha Eun-woo as the front model for its advertisements. This month, they have been engaging in point reward events and attracting new subscribers. KakaoBank, regarded as the original establishment of group accounts, is attracting customer interest through offline events. Events are being held with soccer national team alumnus Park Joo-ho and comedian Kim Gook-jin teaching soccer and golf to group account customers.
Collaborative accounts and group accounts all fall under low-cost deposits. They typically take the form of checking accounts, with interest rates usually set at 0.1% annually. From a bank's standpoint, they can achieve similar funding effects at lower costs than issuing bank bonds or creating high-interest special savings accounts. In the case of KakaoBank, as of the end of March, the balance of group accounts reached 9.6 trillion won. If this money had been raised through bank bonds or savings accounts with a 3% annual interest rate, approximately 288 billion won in interest expense would have been incurred. Conversely, if we assume only the 0.1% interest of the group account is applied, interest expense drops to 960 million won. This means KakaoBank has saved about 280 billion won annually.
Additionally, collaborative accounts attract funds from loyal customers of collaborative brands, while group accounts make it possible to secure stable funds due to regular collection of membership fees. Thanks to these advantages, banks evaluate low-cost deposits as beneficial to their operations. Kookmin Bank even refers to low-cost deposits as core deposits internally.
A spokesperson from a commercial bank noted, "Low-cost deposits are the most advantageous method for banks to collect stable funds," adding, "By saving on funding costs, banks can contribute to profitability; hence they are making significant efforts to secure low-cost deposits."