“What we are doing now in NAVER Financial is something unimaginable in the traditional financial sector. Rather than focusing on profit, we put much more emphasis on whether we are doing something meaningful.” In the financial industry, where profitability is of the utmost importance, focusing on the meaningfulness of work may come across as something unfamiliar. Kim Jae-hong of NAVER Financial, who has 12 years of experience under his belt, is witnessing such difference first-hand. He has worked in 2 financial institutions for a total of 10 years, taking on tasks such as managing credit loans, analyzing profit and loss and planning zero-contact home loan products. He joined NAVER Financial 2 years ago and planned the “loan products for SMEs.” He hopes to address issues in our society through finance, and says this is the reason why he decided to join NAVER Financial.
My first project after joining NAVER Financial was planning a loan product for SMEs. I’m also in charge of making improvements to the product after its launch. Our Smart Store business loan is a product for individuals who run their own business online. In most cases, these users are young, don’t run an offline store and have a relatively short history of financial transactions. This means they are often denied loans by banks or financial institutions, and their interest rate would be very high even when they do succeed in getting a loan. But there are so many of them who are doing so well with NAVER Smart Store. So we met with Mira Asset Capital to begin discussions about entrusting NAVER Financial with the credit evaluation process and taking that into consideration when giving them a loan. To be honest there were so many difficulties in initiating such discussions. It was something that no one has ever tried in the financial sector, and people in this industry are usually rather hesitant to try something new, something that has not been validated before.
NAVER has non-financial data that financial institutions do not use. Some of this data would include the number of times a product was sold, growth rate, return or exchange rate, the number of transactions, and the number of reviews, all of which are available on NAVER Smart Store. We thought such information could be used to determine the credit rating of a business owner. People who are in their early stages of running a business do not have income documents that can back them up, which probably worked against them in getting a loan from traditional financial institutions. We were able to use their credit card history to determine their estimated income, and we continued discussions with Mirae Asset Capital to convince them to use this information for their credit evaluation process.
Another idea we had was that small business owners should not have to use a separate bank app to get a loan. We thought they should be able to go through the entire process of taking out a loan on the NAVER app instead, which also has never been done in traditional banks. For users to take out a loan from a bank, they had to download the bank’s app and open an account. Reaching an agreement on those terms was pretty difficult. We convinced Mirae Asset Capital that it is important to lower the entry barrier for taking out a loan, and that we should first make users think Mirae Asset Capital’s products are extremely convenient.
You can say that our credit loan for online business owners is the first of its kind. It’s something that everyone was too afraid to try out. I am especially proud of the approval rate. The percentage of loan applications that are approved is extremely high for our product. For commercial banks, the rate does not go above 20%, and even when you look at non-monetary financial institutions, the approval rate is far from reaching 30%. However, the approval rate for our product is almost 50%. This means 1 out of 2 people trying to take out a loan gets approved. It’s been almost a year since we launched our product, and there have been almost no cases of late payment. I think this is a remarkable accomplishment compared to traditional financial products.
“You can say that our credit loan for online business owners is the first of its kind. It’s something that everyone was too afraid to try out.”
The biggest challenge was that no one had ever done this before. When I first joined NAVER Financial, this project was just beginning to take off and I was the only one in charge. Collaborating with other teams, including teams in charge of Smart Store data, self-authentication for mobile phones and development, was especially important in order to use non-financial information in the early stages of the project. Thankfully, everyone at NAVER is more open to collaboration compared to the traditional financial sector. Everyone would be so willing to help me out when I ask for help. Another good thing about working at NAVER Financial is that the company encourages me to try out different product planning tasks that I wouldn’t have been able to do in the financial sector.
Users have been giving us feedback that it would be much better if taking out loans from banks was possible, as Mirae Asset Capital is not a bank but a non-monetary financial institution. So we extended our partnership to Woori Bank as well. For Woori Bank, NAVER Financial is not entrusted with the credit evaluation process entirely like Mirae Asset Capital, but we agreed that the existing conditions, such as having to have an offline business site or proof of income, would all be removed. In fact, using loan comparison apps is not an accurate way to get your credit evaluation. You have to first go through a pre-evaluation process and open a bank account in order to go through the actual credit evaluation process. There are so many cases in which business owners take the time to open a bank account, only to find out that their loan application is rejected or that their interest rate and loan limit are different from what they saw on the app. We wanted to get rid of that inconvenience. We thought business owners should be able to use the NAVER app to run credit evaluation that is almost the same as what they would actually get from banks, and make sure that they do not get their loan applications rejected afterwards. In fact, less than 5% get rejected when they install banking apps after checking on the NAVER app, with no change at all on the interest rate or loan limit. I think this is especially important for business owners who always have a lot on their plates.
I try taking out loans myself by using bank apps or visiting different financial institutions. I don’t just check my maximum loan limit or make an application - I actually go through the entire process until the deposit is actually made. Since I go through every step of taking out a loan, I can feel firsthand the inconveniences that our users may also experience. I also conduct lots of interviews with business owners. I combine the feedback from these business owners with some of the assumptions I came up with to make improvements little by little.
Attracting more customers or expanding profit were extremely important goals in the financial institutions I worked for earlier, and there was much pressure about accomplishing those goals. The projects I’m in charge of at NAVER Financial are projects that would not have been possible in the traditional financial sector. There are many financial institutions that do not receive commission fees in their initial steps of launching a service, then slowly begin charging commission fees once they have enough users. We don’t even use this tactic. The total number of small business owners is small, which means it’s impossible for us to gain a large number of users for our product. Our business is much more focused on lending a helping hand to these SMEs. NAVER is able to carry on with such service because it consistently generates profit from its other businesses, and also because we believe helping SMEs thrive is ultimately the way for NAVER to thrive. I loved that I could approach finance this way. I’ve always wanted to take on projects like these.
I was extremely busy for about a year since I first joined NAVER Financial. But once things started slowing down, I began to feel a sense of emptiness. For both planning and developing, beginning a new project is always very fun. But its charm slowly wears off once the service is launched and we begin operating the service. You get caught up in those small administrative tasks and users begin losing interest in your service. People might feel that they just want to plan new projects all the time, and I was no exception. At that time, my boss told me that no one can just work all year long, and that I should take a break, and take the time to read newspapers and books. My boss told me that this was the time to save up my passion and energy for when I have to work on product planning for a new project in the future. I really appreciated that advice. I think it would have been a little hard for me to overcome that period if I had been on my own, with no one to give me such advice. I think it’s something that all service planners think about. The company cannot only push for new projects and businesses all year long. So what I do is that I try to keep up with the market trends and think in advance about what kind of projects and services I would be able to plan. I write and report many proposals on my own as well. Not all proposals get turned into actual projects - only about 10% even stand a chance of becoming actual projects. But it opens up chances for me to plan more projects and services.
“When I get work slumps I write proposals for new projects and services. That in turn leads to more opportunities for me to plan new projects.”
There are several projects I would like to try out, but the first one would be to enable everyone who has been excluded from the current scope of the traditional financial sector to take out a loan, since only those who have signed up for NAVER Smart Store can use our product as of now.
Everyone working in finance would find it meaningful to create a business with high profitability, and I of course think about it as well. We’ve been talking about creating such product in NAVER Financial, and have also been considering it. But I’ve been thinking lately that it would be much more meaningful to support SME owners to run their business successfully rather than to make money. There are lots of business owners within the NAVER ecosystem, and I want to create financial services that could help all of them. We don't have enough data on them, not to mention having to convince financial authorities and resource issues - it’s still a long way to go, but this is ultimately the service I want to make.
If working is simply a win-lose game, then it would be important to have various skill sets right at your disposal. However, I think it’s a long-term marathon that lasts for longer than 10 to 20 years, which means perseverance and refusing to give up are more important than you might think. For me, having a positive mindset as you work means you are being good at your job. When you are working, there will be moments when you just want to give up. It may be because of your lack of competency or resources, or changes in the market or regulations. There are lots of obstacles, but if you let them stop you there it would mean you are not being good at your job, regardless of how talented you are. I think staying positive is related to perseverance.
The work at NAVER Financial is not just about profitability. The work I do is also meaningful, which I think is the motivation behind my work. I think it’s also important that I continue to communicate the meaning of our work to my colleagues. I directly work with business owners, and they often thank me or give me great comments like how convenient our service is to use. Getting these positive feedbacks always motivates me to work harder and to create better services for our users. Many other colleagues are helping out with the operation, and I think it should also be made clear to them that they are working on something very meaningful. I think it’s important that these great values and implications of our work are well communicated with my colleagues so that we can all move forward.
Published APR. 2022