NH bank robots take on clients

NH Nonghyup Bank on Tuesday became the first commercial bank in Korea to launch a robo-adviser that will manage investor portfolios and assist clients in their retirement plans.

Robo-Pro is split into two services: Robo Asset-Pro and Robo Pension-Pro. These artificial intelligence services will help customers maximize their asset allocations as well as their pension fund portfolio. The robot will run a simulation based on the client’s personal information including age, income level as well as current financial assets, according to the banking unit of the agricultural cooperative. The robot will then assess the information and advise clients on investing.

The service is free to clients that already subscribe to the bank’s pension products as well as potential clients.

“In preparation of the expanding retirement pension especially centered on defined contribution [where both the employers and employees contribute regularly to retirement accounts], we plan on further developing individually customized services that strengthen the functions of robo-advisers,” said Lee Kyung-seop, CEO of NH Nonghyup Bank. “We will do our best in securing customers’ convenience and profits so that our clients can easily manage their retirement pension that not only meets each and every person’s [different] needs by developing alternative products.”

NH Nonghyup Bank is not the only institution adopting artificial intelligence in its financial services. Woori Bank plans to launch its own robo-adviser within the year.

Woori has run a trial robo-adviser in its internet and mobile banking services since March and so far 110,000 customers have used it. The bank said that once its full version launches it will will help clients purchase financial products and rebalance assets.

The retirement pension market is expected to grow, especially as Korea faces low growth, low interest rates and an aging population.

In recent years, customers’ preference for defined contribution pension plans has grown. In the first half of the year defined benefit pension plans shrank 75.5 billion won ($68.2 million) to 86.34 trillion won since the end of 2015. During the same period, defined contribution plans rose 6.99 percent to 29.5 trillion won. Although defined benefits still account for 67.3 percent of the nation’s pension plans, the increase in defined contribution plans indicates a growing preference for the funds that allow investors to have more control over their allocations.

The growing popularity of defined contribution plans is one of the main reason banks have been targeting its robo-adviser service. The robo-adviser is seen as the most appropriate tool in managing defined contribution plans, because unlike other plans, the accounts do not require a long-term strategy.

Robo-adviser use is expected to expand next year as the robo-adviser in November will be allowed to manage clients’ pension investments without human employee input.

BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]