The better the question. The better the answer. The better the world works.

How blending strengths can create a revolutionary new product

Discover how an EY team worked with Kakao to create South Korea’s first digital-only bank, changing the future of banking consumers everywhere.

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What happens when great minds don’t think alike?

Disrupting an industry to create something new requires close collaboration.

Kakao is a household name in South Korea, where their messaging app, kakaotalk, connects more than 42 million people across more than 90% of the country’s smartphones. Through the app’s success, Kakao has launched a wide variety of life services, including apps for music, gaming and even ride-sharing. In 2016, Kakao approached the EY team to help them embark on their most ambitious project yet, kakaobank — South Korea’s first digital-only bank.

The team for this project had extensive knowledge of how existing banks in South Korea functioned, and engaged with Kakao to strategize on competing in a crowded, highly regulated market. But Kakao didn’t want to compete — they wanted to completely disrupt. Through their market knowledge, the EY team knew that customers were not happy with the existing banks in South Korea and that an alternative providing a great experience and a competitive price point had the potential to be a true difference-maker. Kakao’s strength is creating great nonfinancial services that people want, but they needed the knowledge from EY in banking business strategy, the customer journey, and process redesign and compliance to make a sustainable impact.

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Integration for innovation

Innovation comes from sharing knowledge and strengths.

The EY team integrated fully into Kakao’s work culture, working side by side with their team to instill a joint mindset, starting simply by adopting Kakao’s casual dress code. While these efforts were subtle, they encouraged an environment of collaboration where Kakao and the EY team could freely debate and bounce ideas off each other to tear up the existing banking model and create something new. On the one hand, the Kakao team questioned every aspect of traditional banking and challenged the EY team to look outside of how things had been done, to see how they could be done. On the other hand, the EY team challenged Kakao’s ideas to improve the feasibility from a financial services perspective. Traditional banks incur high operational costs in maintaining networks of brick and mortar branches with employees to service customers. However, since kakaobank was going to be mobile-only, the EY team helped them design a hyper-lean business model where cost savings could be applied to boost information security, designing a great user experience and providing a low cost for customers.

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Changing the future of banking

The success of kakaobank is rippling around the world.

The results were truly revolutionary. In the first six months after the bank’s launch, it gained 5 million customers, going up to 6.3 million customers with US$8 billion in deposits after only one year. Customers could now have convenient access to a bank in the palm of their hand. They could even open an account in 7 minutes, compared to the average 30- to 40-minute process at other banks.

Its success has fundamentally changed the relationship between banks and customers who are left wondering why traditional banks couldn’t do this. The EY team is now working with these established banks in South Korea, and around Asia, to improve their customer experiences in the wake of this project’s disruption. Asia-Pacific FSO has introduced a new go-to-market campaign, leveraged in different parts of Asia, to help their customers build a digital bank in their respective markets. This will open the door to a new wave of customer-focused banking solutions across the region. Banks in Europe and North America have also reached out to the EY team to leverage their experience to transform their own offerings.

Through exceptional client service, from strategy to workplace culture, the EY team and the Kakao team built a stronger collaboration by blending their top skill sets and areas of proven experience to change the future of consumers everywhere.