Hyundai’s Big Data Ambitions Depend On A Little-Known Credit Card Company

^South Korea’s second-biggest conglomerate by revenue has big plans in the hot field of big data—and a little-known credit card subsidiary looks set to play a crucial role.

Hyundai Motor has ambitious plans to invest more than $50 billion over the next five years to become a “Smart Mobility Solution Provider.” It’s a broad plan that includes crunching data—”the new oil” in the digital age—to provide personalized services and content related to shopping and streaming.

In line with the plan, Hyundai Card, the Korean car giant’s credit card unit, has been quietly winning the war for data science talent for years and is already capable of analyzing the consumer spending patterns of its more than 9 million card holders. Hyundai Card’s data science expertise makes the company, which is preparing for a blockbuster IPO, more important than ever for the auto-to-steel conglomerate.

Hyundai Card collects 2,000 to 3,000 raw data from each of its credit card holders, says CEO Ted Chung in a video interview. “Hyundai Card is getting so much precious data,” says Chung, who joined the Hyundai group in 1987 after he earned an M.B.A. from MIT. “When I say precious, it’s very commercial data. It’s spending data that can be easily commercialized.”

To be sure, Hyundai Motor also has its own data science team. But the car maker focuses on operations data, notes Chung. For example, using data to predict when it’s time to change a car’s tires or brakes. “But when it comes to individual persons and spending or lifestyle, we’re the only one,” says Chung, who is the brother-in-law of Hyundai Motor Group chairman and billionaire Euisun Chung.

There are various potential applications of Hyundai Card’s data analytics within the conglomerate. It can, for example, be used to predict what kind of car a customer would be interested in buying by figuring out his or her personal details and preferences, such as marital status and hobbies. “We can be 75% sure because we know your taste and lifestyle,” says Chung.

It’s not a game changer, but it could provide a welcome boost to Korea’s largest car maker by sales. Hyundai Motor, like its global rivals, is trying to steer through the pandemic-induced economic downturn, as well as the auto industry’s shift to electric and self-driving vehicles. Last month, Hyundai Motor reported car sales in the third quarter slumped 9.5% to 998,000 units from the same period last year.

Hyundai Card’s data analytics can also be applied to cars, says Chung. For example, it can help calculate each car’s residual value—the amount a leased car will be worth at the end of a lease—which is an important factor in calculating the car’s monthly lease payments. This is more relevant to Hyundai Motor’s “Smart Mobility Solution Provider” plan, which includes car sharing and renting. As part of its drive into car renting, the conglomerate’s financing arm paid $170 million in February to acquire 42% of Sixt Leasing, one of Germany’s largest car-rental companies. Hyundai’s financing arm, called Hyundai Capital, is also led by Chung.

Chung will continue to expand Hyundai Card’s data unit, which he’s been growing since 2015. Currently, its data is used to provide personalized marketing, such as customized coupons, for its own Hyundai Card holders.

“Hyundai Card has pushed analytics insights directly into customers’ devices,” notes Julian Sun, a Shanghai-based research director specializing in business analytics and data science at research firm Gartner. “It gives its customers more exposure to consuming analytics insights, so it would give more chances to let Hyundai Card understand their customers better by learning their behaviors….