Hyundai Mobis Co., South Korea’s top auto part maker, has partnered with the country’s top lender Shinhan Bank to help its partners and subcontractors secure needed loans – a move that marks a strategic shift in the automotive conglomerate’s financial approach.
According to industry sources on Sunday, Shinhan Bank will begin offering loan services through Hyundai Mobis’ parts distribution platform HAIMS on April 18.
The initiative is designed to facilitate easier capital access for its suppliers at favorable borrowing costs, sources said.
Hyundai Mobis, a subsidiary of Hyundai Motor Co., selected Shinhan Bank as its new financial partner through an open bidding process, replacing its previous partner Hyundai Commercial Inc., the financing unit of Hyundai Motor Group.
Under the new partnership, Shinhan Bank, the flagship unit of banking conglomerate Shinhan Financial Group, will offer Hyundai Mobis’ 1,200 contractors auto parts purchase loans and factoring services, where receivables are used as collateral for financing.
The program will cover auto parts support centers and dealerships across the country.
RARE MOVE FOR HYUNDAI
The Hyundai-Shinhan partnership is a significant shift, as it marks the first time Hyundai Mobis has moved supplier financing away from Hyundai Commercial to a local commercial bank.
Analysts said the partnership underscores a growing trend of strategic collaborations between financial institutions and corporates, as companies seek more competitive and flexible financing solutions beyond their traditional group-affiliated lenders.
“It is unusual for Hyundai Mobis to step outside the group’s financial umbrella and join forces with Shinhan Bank. This reflects a broader trend of financial institutions seeking to expand non-banking profits. Companies are also looking for diversified funding sources. Such cross-industry alliances will increase going forward,” said a financial industry executive.
By choosing an external financial institution over an in-group credit finance company, Hyundai Mobis will inevitably share sensitive data, including its suppliers’ transaction details and component inventory status.
Industry officials said Hyundai Commercial’s high funding costs have made low-interest capital difficult to access, prompting Hyundai Mobis to seek another financial partner.
“Instead of keeping supplier financing within the group, Hyundai Mobis opted for an open bidding process, allowing banks to compete for the loan business,” said an industry official.
Currently, such loans needed by Hyundai Mobis’ partners stand at 500 billion won ($344 million) annually.
Shinhan Bank is expected to expand its financial services to 36,000 Hyundai Mobis’ affiliated auto repair shops.
INCREASING CROSS-INDUSTRY PARTNERSHIPS
Shinhan Bank has been advancing its banking-as-a-service (BaaS) system to expand its business-to-business (B2B) operations.
Since last year, Shinhan Bank has been prioritizing corporate financing for suppliers as a new growth driver in a bolstered BaaS initiative.
The bank’s BaaS clients surged to 97 by the end of 2024 from three in 2023.
Last November, Shinhan partnered with Hyundai Steel Co. to launch a non-face-to-face loan service to offer the steelmaker’s smaller business partners loans via Hyundai Steel’s online platform HCore Store.
The financial sector is witnessing a growing trend of cross-industry partnerships.
Banks seeking to diversify their revenue streams beyond traditional banking are joining forces with corporations looking to expand their customer bases and streamline financing.
KB Kookmin Bank has collaborated with Samsung Financial Networks, a union of Samsung Group’s four financial affiliates, and Starbucks Korea to offer joint financing services.
Hana Bank has joined forces with Danggeun Market Inc., Korea’s largest online used-goods market service provider, and online retail giant Coupang Inc. to broaden its BaaS customer base.
Woori Bank said it is ramping up efforts to expand its BaaS service by forging corporate partnerships.
By Jae-Won Park
wonderful@hankyung.com
In-Soo Nam edited this article.
