[NEWS IN FOCUS] Naver offers new account service

Non-financial firms are competitively introducing savings accounts in partnership with local financiers to gain a foothold in "techfin."

Techfin is industry jargon for when internet companies add financial services to their existing online or mobile platforms. Fintech, on the other hand, is when financial companies provide services through newly created internet platforms.

Simpler-than-ever registration processes and higher-than-average interest rates compared to traditional banks are expected to appeal to young customers.

Naver Financial, a Naver subsidiary, on Monday introduced its account service in partnership with Mirae Asset Daewoo. In the form of cash management account (CMA), the new service provides up to 3 percent interest to savings under 1 million won ($830). CMA accounts are a combination of savings and investment accounts usually provided by securities companies. They offer relatively high rates but don't offer the protections of a bank account.

Naver, operator of Korea’s most popular search engine, expects its strong affiliation with Naver Pay, the company’s mobile payment service, will help overcome the company’s latecomer position compared to Kakao.

Kakao, which operates KakaoTalk, has already jumped into the finance industry by launching its own bank subsidiary in 2017, which turned to profit last year. Kakao has been accelerating its finance expansion and acquired a local brokerage house early this year to offer stock-trading services.

Naver said its clients will benefit if they make transactions through Naver Pay when doing shopping online. If the client connects Naver Pay with the newly launched savings account to make transactions online, the account will offer an additional 3 percent of the transactions made through Naver Pay in loyalty points.

The 3 percent rate on the savings account will be offered without any condition until Aug. 31. Afterwards, the clients have to make at least 100,000 won in transactions through Naver Pay in the prior month in order to get the rate. If Naver Pay transactions are less than 100,000 won in the previous month, the account will only pay 1 percent.

“Naver Financial is trying to generate new value by embracing those who have been in the blind spot in terms of finance, such as small business owners or full-time housewives,” said Choi In-hyuk, head of Naver Financial.

The strong affiliation with Naver Pay, which is directly engaged in online shopping activities, will allow for the collecting of meaningful data of its customers which can be later utilized to provide more precise recommendations, either of financial products or shopping items.

“Naver Financial is expected to create a synergy effect with Naver Pay through online shopping activities by collecting a massive amount of data ranging from the user shopping preferences to transaction method and the item delivery times,” said Hwang Hyun-joon, an analyst from DB Financial Investment.

“With the economy transitioning into a data economy, Naver Financial is expected to get an upper hand in this criteria, and is highly likely to generate additional business utilizing such data which will give them a premium in value compared to other techfin or fintech players.”

SK Telecom, the nation’s No. 1 mobile carrier, announced Monday it will launch an online check account in partnership with state-run Korea Development Bank on June 15.

Through its financial subsidiary Finnq, the online account provides 2 percent interest to its subscribers on savings up to 2 million won. A 2 percent rate is one of the highest among the first-tier lenders. It will also protect its client funds up to 50 million won.

BY JIN EUN-SOO [jin.eunsoo@joongang.co.kr]