Shinhan, Hana Intensify Battle for 1.6 Million Nara Sarang Card Customers

As the second phase of the Nara Sarang Card program ramps up, Shinhan Bank and Hana Bank are intensifying their fight to win customers. With tighter household lending rules limiting growth in interest income, banks are increasingly turning to institutional business as a way to secure both low-cost deposits and a large base of young customers estimated at about 1.6 million.

According to the financial industry on Monday, Shinhan Bank recently created a new key performance indicator category for the Nara Sarang Card. Sales results will be reflected directly in branch evaluations, fueling competition among frontline staff. Executives have also urged an expansion of sales at recent management meetings, industry officials said.

Hana Bank is also pressing to seize an early lead. The bank set up a Nara Sarang business division in January and has been working with branches to boost issuance, according to industry officials. With the gap between the two banks not large, competition for early momentum is intensifying.

Shinhan Bank, Hana Bank and IBK Industrial Bank of Korea, the program’s card issuers, have promoted benefits such as up to 30% discounts at military stores (PX) and 10% to 30% discounts at convenience stores and on public transportation. That has helped push issuance this year to more than 130,000 cards. Shinhan leads, with Hana closing in. IBK has lagged, with a gap of more than 20,000 cards behind Hana.

The main prize is access to young customers. Service members can choose the card themselves, and banks see a strong chance the account relationship will continue after discharge. Over the contract period, the program is viewed as a long-term investment because it can bring in a potential customer pool of about 1.6 million. If linked to salary transfers, banks also expect an inflow of low-cost deposits.

Shinhan was the sole operator during the first phase from 2007 to 2015 and was selected again as an issuer after 11 years. Hana joined the program for the first time and is putting heavy emphasis on expanding its base among younger customers.

Broader conditions are also pushing banks toward institutional business. As growth in household lending slows and pressure rises to deploy funds under policies aimed at expanding productive finance, securing a stable deposit base has become a key task. Shinhan’s creation this year of an institutional and partnership sales group reflects that shift.

“A major burden is that banks have secured a rare chance to participate and now need to deliver results,” a financial industry official said. “Because it offers a way to secure low-cost deposits and future customers at the same time, competition is likely to intensify further.”