Keep the Change
How the largest Korean American bank in the nation is courting a new generation of KAs.
story by REBECCA U. CHO
photograph by INKI CHO
When comedian Paul “PK” Kim decided to add a Los Angeles Koreatown parody to the parade of “Gangnam Style” parodies on YouTube, BBCN Bank wanted to take part in it. Sure enough, near the end of the video that pokes fun at Koreatown living, the bank’s signature tri-colored logo makes appearances on Kim’s cheek and the arm of dancer Yuri Tag from Kaba Modern.
BBCN’s participation in the video may have been mostly for fun, but the institution’s goal to reach the audience most likely to watch and appreciate the video—1.5- to second-generation Korean Americans—is dead serious.
Like other ethnic banks that were born from serving the banking needs of minority, immigrant populations, BBCN faces the challenge today of making a case for its relevance and value as its traditional customer base ages and a generation of English-speaking Korean Americans grow in both number and influence.
Chief executive Alvin Kang, 67, is the first to recognize the need to adapt to survive.
“Hopefully we can retain our customer base even as it transitions through generations,” Kang says. “To do that, we have to change ourselves. We have to provide the products and services these different generations want.”
The formation last November of Los Angeles-based BBCN from the merger of Nara Bank and Center Bank, both longtime fixtures in the Korean immigrant community, instantly created the largest Korean American bank in the nation with more than $5 billion in assets and 40 branches across the United States.
The merger was a smart move and welcomed by investors, consolidating two competitors in a Korean American banking space that has become too crowded, according to Timothy Coffey, a San Francisco-based analyst with FIG Partners, a banking research and consulting firm.
Leading by example, BBCN could touch off more consolidation among Korean American banks, which number about a dozen.
“Investors are concerned there is not enough business to support all the banks available to serve the Korean American community,” says Coffey, who tracks BBCN and other banks on the West Coast.
Sitting (L-R): Brian E. Van Dyk, Executive Vice President and Chief Information Officer; Alvin D. Kang, President & CEO; Bonita I. Lee, EVP & Chief Operating Officer; Philip E. Guldeman, EVP & Chief Financial Officer. Standing (L-R): Myung-Hee Hyun, EVP & Chief Deposit Officer; Kyu S. Kim, EVP & Chief Commercial Banking Officer; Jason K. Kim, EVP & Chief Lending Officer; Lisa Kim Pai, EVP & Chief Legal & HR Officer; Mark Lee, EVP & Chief Credit Officer; Sook Kyong Goo, EVP & Chief Operations Administrator.
Along with the strength displayed on paper, BBCN emerged with a bold new marketing campaign. The fresh, brightly colored logo and an anthem to become “the nation’s premier Asian American bank” spoke loudly that the new entity was hungry for new customers and meant to be around for a long time.
BBCN and its predecessors have traditionally served first-generation Korean American business owners. But the influx of Koreans who arrived in waves in the 1970s and 1980s are starting to transition their businesses to their second-generation offspring.
This next generation of customers is comfortable and savvy operating in the mainstream, Kang says. As a result, the bank is working to provide the same banking services and products that these potential customers would find at bigger, mainstream institutions, including electronic delivery channels.
“We never want to give up the Korean heritage and the culture. We have to be bilingual, but we have to provide the same quality products and services that you can get from Wells Fargo and Bank of America,” Kang says.
BBCN hopes its selling points can be the personal attention and cultural familiarity it can provide to second-generation Korean Americans and beyond.
In September, investment banking firm Sandler O’Neill released its list of top-performing small banks, including BBCN among the 25 selected as the sole bank from the West Coast and the only ethnic bank. The firm evaluated 461 banks.
The recognition was an affirmation of sorts for Los Angeles-based BBCN, even as it fights to stand out against the other major Korean American players, such as Hanmi Bank and Wilshire State Bank.
But BBCN’s competition also arises from mainstream banks such as Wells Fargo, Bank of America and Comerica Bank. Institutions that serve largely Chinese Americans, such as Cathay Bank and East West Bank, are also moving into the space, Kang says. In 2007, East West formed an alliance with PGP Capital Advisors, an investment banking firm for emerging companies that largely served a Korean customer base.
Korean Americans, due to their leanings toward entrepreneurship, are a part of a highly coveted group of banking customers, he says. Korean Americans were the most entrepreneurial Asian immigrant group, according to the 2007 U.S. Census.
“The Korean community is actually a very finite community, and there’s a lot of competition,” Kang says.
Coffey of FIG Partners says that an ethnic bank is not successful in all communities. But the Korean American community is different for being “extremely entrepreneurial.” And banks such as BBCN can take some comfort in the high degree of customer loyalty Coffey has noted in the Korean American community.
“I know of Korean American business people that have accounts with a bank in Koreatown and with a mainstream bank,” Coffey says. “That is unique loyalty to specific financial institutions that I don’t see very often elsewhere.”
At BBCN, where English is the primary language for business operations and employees are a mix of first-, 1.5-, second- and third- generation Korean Americans, the company is starting to look for talent based more purely on ability than whether candidates are bilingual. Increasingly, BBCN is reaching out to businesses and individuals who are not Korean—one of the bank’s large portfolio of loans is a group of supermarkets under the management of South Americans.
In many ways, Kang, a third-generation Korean American, is the fitting person to lead BBCN into addressing a new generation of mostly Englishspeaking, America-raised customers. His appointment in 2010 to Nara Bank’s CEO was in itself a sign of the changing customer landscape and the bank’s commitment to adapting to Korean American needs.
“I think Nara had always been on the more progressive side. But having a Korean CEO who doesn’t speak Korean, I’m sure that came as a little bit of a surprise to some people,” he says with a laugh.
After meeting for an interview at BBCN’s headquarters, which overlooks one of Koreatown’s busiest intersections at the corner of Wilshire Boulevard and Western Avenue, Kang and his communications team led the way across the street to Denny’s.
Sipping a hot coffee around 7 p.m. after a normal 12-hour workday, Kang shared that he joined Nara Bank in 2005 as executive vice president and chief financial officer in part to get in touch with his Korean heritage.
“I’m more American than Korean, and I don’t speak Korean. But just the opportunity to connect with my roots, my heritage, I figured I’ve just got to do this,” he says.
Kang grew up in Hawaii, where his grandparents immigrated from South Korea in the early 1900s and where both of his parents were born. On his mother’s side, Kang’s grandmother was a seamstress and his grandfather worked in the sugar cane fields. Growing up in a block away from a military base, Schofield Barracks, in Wahiawa on the island of Oahu, Kang would break through the barbed wire fence and play, looking for spent shells and climbing trees. His father ran a laundry and, like many residents, serviced the military.
Within months of graduating from Cal State Los Angeles in 1966 with a degree in accounting, Kang was drafted into the Army during the Vietnam War. He went through Officer Candidate School and served the U.S. as a lieutenant and finance officer.
He joined civilian working life after coming out of the Army as an audit partner at KPMG. There were few Asians in the business world then, he says.
“I think, as an Asian American, you had to work harder. That was something you just had to do. You had to be better, you couldn’t be the same,” he recalls.
He later worked as an audit partner at Ernst & Young as well as chief operating officer of Broadway Federal Bank. He joined Nara Bank in 2005 and five years later became CEO.
At BBCN, which stands for Better Banking from California to New York, Kang sees the bank evolving with the rapid changes he’s seeing in the U.S.
“I think almost within one generation, [the demographics] moved from Korean into English. So that transition is going. You can see it in our customer base. It’s happening in our company. So it’s just going to happen naturally,” Kang says.
The key is to diversify the bank’s services in anticipation of a broader, more eclectic group of Korean Americans. In addition to continuing to serve the first generation as it has for years, BBCN will invest in more technology for second-generation customers. And for recent Korean immigrants to the U.S., who may speak more English and be a bit more sophisticated in their needs than their predecessors, the bank will have to provide a mix of personal touches and electronic delivery systems.
“I think all the Korean American banks really have to follow that path,” he says. “Otherwise we’re not going to survive.”
This article was published in the October 2012 issue of KoreAm. Subscribe today! To purchase a single issue copy of the October issue, click the “Buy Now” button below. (U.S. customers only.)