Shinhan to boost Vietnam digital services with Tiki

South Korea's Shinhan Financial Group has picked Vietnam’s e-commerce startup Tiki as its first strategic partner in the Southeast Asian country, where Shinhan is aiming to expand its digital services beyond the financial arena.

The No. 2 banking group in South Korea said on Monday it has agreed to buy a 10% stake in Tiki for an undisclosed sum to become the latter's third-largest shareholder.

Shinhan Bank, the biggest foreign lender in Vietnam by assets, will take a 7% stake in Tiki. Shinhan Card is set to hold the remaining 3%.

With over 20 million customers, Tiki has been leading Vietnam's e-commerce market with fast delivery services for a variety of items from food to insurance products.

While reportedly planning a US initial public offering, the online retailer in Vietnam has been making its push into financial services, following in the footsteps of other Southeast Asia's e-commerce platforms like Singapore’s Grab.

"By forming a strategic alliance with Tiki, Shinhan will diversify its customer base, upgrade credit evaluation systems based on non-financial information and cope with the digital environment," Shinhan said in a statement.

“Based on Shinhan’s financial expertise and Tiki’s database in a broad range of areas, we are expecting to build a new converged digital ecosystem in Vietnam," said a Shinhan Financial official in the statement.

Shinhan has penetrated into Vietnam, one of the world's fastest-growing economies, with mobile banking apps tailored to local tastes.

Its banking app, upgraded twice since its launch in 2018, has taken off with digital banking customers in Vietnam. The number of its subscribers has nearly trebled to 648,799 as of the end of 2021, in the country with a 97 million population.

With a market capitalization of 21.5 trillion won in Korea, Shinhan is now a full-fledged financial services provider in Vietnam, ranging from retail banking, corporate finance, and investment banking to wealth management.

"Through strategic partnerships with non-financial services companies in various fields, we will accelerate our transformation into a leading digital company," Shinhan noted.

Its overseas branches reported a 34.5% jump to $129.5 billion won in first-quarter net profit from a year earlier. 

For its banking arm, Vietnam is Shinhan Bank's biggest foreign market, accounting for 32% of its net profit from abroad, followed by Japan and China. 

Other leading Korean banks have been expanding their footprint into Vietnam with an aim of becoming a regional player in Asia. 

Hana Financial Group has branched out into Vietnam through a stake purchase in a local bank. Last week, its brokerage unit Hana Financial Investment Co. said it had acquired a 35% stake in Vietnam's BIDV Securities for 142 billion won ($114 million) to become its No. 2 shareholder.

To beef up non-banking operations across Asia, Hana is looking for new investment targets in Indonesia and Vietnam, while bolstering corporate finance in the US and Europe.

As for Tiki, Seoul-based private equity firm STIC Investments Inc. and a joint fund between online portal Naver Corp. and Mirae Asset Securities. -- invested in the e-commerce platform last year.

Write to Sang-Yong Park at yourpencil@hankyung.com
Yeonhee Kim edited this article.