Hyundai Card makes a big bet on “super customization”

Jane, an officer worker living in New York, goes on a family trip to Los Angeles for her baby’s 100th day celebration. Upon her arrival at the L.A. Airport, the list of local restaurants serving the types of cuisine she loves pops up on her smartphone. They are all located near the airport. A few hours later, 30 percent discount mobile coupons for organic diapers arrive. She finds her favorite diaper brand among them. Since she has only 10 diapers left, she went on to buy the diapers to use during the trip with the coupon at a discount rate.

The virtual situation is made possible by a service described by the term “super-customization.” Based on your purchasing history of certain products and services as well as the frequency of purchases and preferred brands, the service recommends what are deemed to be the most suitable to you. The service does not only consider individuals’ spending patterns but also comprehensively analyze the reactions from customers according to when and how they receive recommendations for certain services and products.

Customized services have not been common in the Korean financial industry. Hyundai Card took the lead in the customized service field in 2015 to develop its own super-customized services based on data. Hyundai Card combined artificial intelligence (AI)-enabled tags developed through customer data analysis with real-time data such as customers’ locations and weather conditions to provide customized customer benefits real time. Then the service converts customer data into tags in just a few seconds to be utilized to create information for Hyundai Card customers.

Hyundai Card Vice Chairman Ted Chung explains the limitations of market segmentation method, during an interview with the New York Times. (Source=The New York Times YouTube screen capture)

Until recently, market segmentation was a dominant method for finding out the needs of customers. The method classifies customers under specific categories and provides the same services to customers under the same category. But the method was no longer sufficient to capture the minds of customers. Even within the same category, customers’ characteristics and tastes differed minutely, meaning the customers’ needs that companies assumed through the market segmentation method turned out to be different from the products or services customers actually bought.

That prompted many companies to introduce customized services that analyze customer data based on cutting-edge information technologies including AI or algorithm to offer information in all areas of their business operations – from product planning to production, PR and sales. Amazon, the world’s largest retailer, for instance, analyzes individual customers’ taste and preference whenever they log onto the web site based on their past purchase history and comes up with customized shopping suggestions each time they log onto the site. Facebook launched “Facebook News Tab” service that offers AI-based customized news service in October 2019. Now, super customization is spreading rapidly across online retailers or social media.

Credit card payment data contain massive information about cardholders such as their spending habits and life cycles.
(Source=The New York Times YouTube screen capture)

However, enormous customer data from credit card issuers home and abroad – from their gender to residence, shopping areas, consumption behavior and life cycle – have not been actively utilized. According to the Bank of Korea, 80.2 percent of Koreans own credit cards and 79.1 percent of those owners are active users.

Hyundai Card launched a project to do something about the ample data. The company first built “Data Lake,” based on credit card data from some 8 million customers. The biggest and the most sophisticated data storage in the Korean retail finance industry, Data Lake contains customers’ payment data; spatio-temporal data that offer customers’ demographic information and payment context; and atypical data such as images and articles. By combining the diverse data from Data Lake in many different ways, Hyundai Card has come up with a delicate algorithm – numerous formulas that classify the way cardholders buy products or services.

D-tag, self-developed by Hyundai Card, is based on thousands of data points – elements that would explain what triggers cardholders to purchase certain products and services. (Source=The New York Times YouTube screen capture)

Hyundai Card has also developed D-tag, a new data analysis tool. D-tag is based on thousands of data points – elements that would explain what triggers cardholders to purchase certain products and services such as age, occupation, taste and spending habit. Hyundai Card can predict what actions its customers will take by exploring how often they repeat a certain behavior – by day, week and month – as well as what time and where they do so. The forecast is then combined with the customers’ location and weather condition to provide the most optimal information.

That is how Hyundai Card has implemented and operated its own super customization services, which dissect individual customers’ characteristics in detail and offer in a timely manner the information or benefits that certain customers are deemed to need.

Hyundai Card Vice Chairman Ted Chung explains Hyundai Card’s digital transformation at “SAP Executive Summit 2019” in July 2019. (Source = sapstroyhub.co.kr screen capture)

“People used to think that only top digital companies like Google deal with data, but now everyone needs to use data regardless of what business they are in,” said Hyundai Card Vice Chairman Ted Chung during the conversation with SAP CEO Jennifer Morgan at “SAP Executive Summit 2019” in July 2019. “Hyundai Card has digitally transformed in every aspect for the future and our fate will change should the move fail.” Hyundai Card has since 2015 spent more than 300 billion won on beefing up the company’s data science capabilities. The company has expanded human resources specializing in digital business. They now total 350. The company has also transformed organizational structure, corporate culture and infrastructure to that end.

Hyundai Card’s AI chatbot “Buddy,” based on ABM Watson’s cognitive technologies that learn and analyze various data for customer service.

Hyundai Card’s Digital Transformation strategy has been equally applied to the services for its customers. It has come up with several different digital services to enhance customer benefits. “Lock&Limit” enables customers to limit where and how much to pay with their credit card. “Virtual card number” service lets customer create virtual credit card numbers to make secure payments and terminate them right after use. “PayShot” allows customers to pay with a single click. “Buddy” is an AI chatbot based on IBM Watson’s cognitive technologies. “Chameleon” is a new type of a credit card that integrates multiple credit cards issued by Hyundai Card, making it possible for customers to carry around a single physical card. They can choose different cards on an app whenever needed. “Overseas remittance” offers cheaper remittance fees to Hyundai Card holders with an ID on an app.

What is the ultimate goal of “Digital Hyundai Card,” which keeps evolving every minute on the back of data science? “We want to preemptively offer the type information that customers need even before they realize what they want,” said a Hyundai Card spokesperson. “Customers will feel our touch and care more often and closely via AI,” Hyundai Card Vice Chairman Ted Chung said in a recent interview with the New York Times. “At the very moment you need us, we will be there for you.”

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