In this blog, we will discuss Korean, another Asian language. In addition to the rapid growth of the economy, AI technologies are developing at a rapid rate as well, including chatbots. Consumption behaviours in South Korea are characterized by the widespread use of smartphones and the internet, which makes it essential for businesses operating here to provide fast and accessible automated customer service.
Facts about Korean
Korean, also known as Hangul, is the official language of South Korea and North Korea. It is spoken by approximately 75 million people worldwide, with most native speakers living in South Korea. The Korean language has many loanwords from Chinese due to Korea's historical interactions with China. Although it is also spoken in other countries, that is mainly among immigrant communities.
The Korean language has undergone a series of changes in its writing system throughout history, eventually leading to the modern form used today. The first known Korean writing system dates back to the 3rd century BC and utilized Chinese characters to record important texts and the history of the Gojoseon kingdom.
As the Korean language developed, a new writing system called Hanja emerged, which combined Chinese characters with native Korean characters. This system was used to write everything from official documents to poetry.
In the 15th century, King Sejong the Great created a new writing system called Hangul, specifically designed for the Korean language. Hangul is a phonetic alphabet, meaning that each letter represents a distinct sound. This innovation made it easier for ordinary people to read and write, leading to increased literacy rates in Korea.
There are several key differences between the Korean and English languages. In Korean, the basic sentence structure is subject-object-verb, unlike English's subject-verb-object. This means that the verb typically comes at the end of a sentence in Korean.
Another significant difference lies in verb endings and pronouns. In English, verbs generally remain the same regardless of the sentence's form, but in Korean, verbs change their endings based on the tense and form of the sentence, which can be complex and challenging for English speakers. Additionally, the Korean language has a complex system of pronouns based on the speaker's relationship with the person they are addressing, including different pronouns for formal and informal situations, as well as different levels of politeness.
Customer service in Korean (in South Korea)
According to the EF English Proficiency Index, South Korea was ranked 36 out of 111 countries, indicating a moderate level of proficiency. This puts it in the "moderate proficiency" category, alongside countries such as Japan and China. In fact, the modern Korean language includes numerous expressions borrowed from English that have similar pronunciations to the original English words.
Despite the significant emphasis on English language education in South Korea, students still encounter difficulties achieving proficiency in the language. One reason for this is the traditional approach to English language education in South Korea, which has historically prioritized grammar and vocabulary over conversational skills and real-world communication.
The growing national interest in learning Mandarin could potentially lessen South Korea's "English fever." This shift is due to China's status as South Korea's largest trading and tourism partner, leading many Koreans to recognize the significance of being proficient in Mandarin. While the number of South Korean students in U.S. universities has dipped in recent years, the number of Korean students in Chinese universities has more than tripled since 2003.
Moreover, since the Korean language embodies numerous social and cultural values, communicating with customers solely in English can lead to a lack of cultural sensitivity, ultimately resulting in subpar customer service. As a result, offering customer service in Korean is crucial for building customer loyalty and satisfaction.
Key customer service trends in South Korea
- Mobile services
The utilization of the internet and smartphones is widespread in South Korea, with a high level of penetration. More than 98% of South Korean households access the internet daily and over 85% of the Korean population owns a smartphone (Data Reportal, 2022). In addition, E-commerce has become highly accessible in South Korea, with approximately 90% of the population utilizing online shopping platforms, and this number is projected to increase to 94.4% by 2023.
Given this extensive usage of online devices, many South Korean businesses are prioritizing mobile services and mobile customer support to meet the needs of their customers.
The internet has also emerged as a critical means through which customers obtain information on various products and services. With the ability to search for products and read reviews before purchasing them in-store, social networks have become a common platform for exploration, product evaluation, and purchase. Internet influencers and product testers also wield significant influence over consumer decision-making.
Consequently, these trends have presented new challenges for businesses in delivering excellent customer service through online channels.
- Social media customer service
As of January 2022, South Korea had approximately 47 million active social media users, representing around 89% of the total population. This makes South Korea one of the most socially connected countries in the world. The most popular social media platforms include KakaoTalk, Instagram and LINE.
In South Korea, the extensive number of active social media users has made it a valuable and widely used platform for companies to interact with customers, provide customer support, and raise brand awareness. Social media customer service enables businesses to respond to customer inquiries promptly and efficiently, offering real-time support.
As a result, many businesses operating in South Korea are now investing in social media marketing and customer support to engage with their customers and expand their operations. Additionally, social media is being utilized by companies to collect feedback from customers and establish a connection with them.
This has led to high customer expectations, who generally anticipate personalised services and round-the-clock support. In this regard, technological tools such as Algomo's chatbot can serve as an invaluable resource for businesses attempting to enter the South Korean market.
Overview of automated customer service in South Korea
Korean chatbot-building is supported by both Watson and Dialogflow. Watson can handle natural language processing tasks like sentiment analysis, entity recognition, and language identification on Korean text, while Dialogflow supports intent recognition and entity extraction.
Apart from these, other chatbot-building platforms that integrate with social media are well-established in South Korea. Kakao i, for instance, is a popular chatbot-building platform that integrates with various Kakao services, including KakaoTalk, the most widely used messaging app in South Korea. Developers can also use Naver Clova and LINE Bot Designer to create chatbots for the LINE messaging app, with a user-friendly drag-and-drop interface.
Market size
The chatbot market in South Korea has been growing rapidly in recent years. As of 2021, the chatbot market in South Korea was valued at approximately USD 408.6 million. The revenue in the chatbot market in South Korea is projected to reach around 256 billion Korean won (approximately $225 million USD) in 2025, with an annual growth rate of 17.7%. (Source: Statista)
The growth of the chatbot market in South Korea can be attributed to several factors, including the increasing demand for AI-powered customer service solutions, the high penetration rate of messaging apps, and the growing trend of conversational commerce.
Additionally, the South Korean government has also been promoting the development of AI technologies, including chatbots, which is expected to further drive the growth of the chatbot market in the country. For instance, Seoul launched its AI National Strategy in December 2019, expressing the goal of becoming a global leader in the sector. The support for the AI industry features heavily in the Korean New Deal, the Moon administration’s 160 trillion won ($146 billion) COVID-19 recovery program.
Main application sectors
- Public services
In March 2021, Korea's Ministry of the Interior and Safety launched GoodPy, also known as "Virtual Assistant Service for the Public". This service provides personalized administrative information and assistance to citizens.
GoodPy is designed to offer anticipatory guidance and consulting services based on the most popular private apps in Korea, such as Naver, KakaoTalk, and Toss. The service also allows for payment on a single screen to maximize convenience.
By the end of 2021, GoodPy had gained 14 million subscribers, meaning one out of every four citizens in Korea was using it. The service has helped over 44 million Koreans schedule 370 million vaccination appointments, guided users on eligibility for the COVID-19 Relief Fund, and helped 90% of recipients receive the funds within two weeks of application.
- Financial industry (Source)
The Korean financial industry has embraced chatbots, with major players like Kookmin Bank and Kakao Bank leveraging the technology to offer various financial services to their customers. Kookmin Bank launched its chatbot, "Liiv Talk Talk," in 2017, enabling customers to conduct various financial transactions such as account inquiries, fund purchases, and overseas money transfers.
In 2018, Kakao Bank, South Korea's largest internet-only bank, introduced a customer support chatbot available on KakaoTalk Plus Friend. In typical Korean fashion, the chatbot incorporates video, emoticons, and other features in addition to text. The launch was aimed at addressing a labour shortage, as the bank experienced rapid growth, reaching five million customers in just six months.
According to a report, AI accounted for approximately 85% of communications between Korean financial companies and customers in 2020, leading IBM to predict rapid growth in financial chatbots in South Korea.
Local players
- DeepBrain AI is an artificial intelligence technology company that mainly focuses on 4 industries, including financial services, retail and commerce, education and media. The company's chatbot technology supports more than 80 languages, including Korean. Unlike traditional chatbots, its chatbots are integrated with "AI humans" with physical avatars displayed on the interface, interacting with customers. Through "AI Human," the company provides digital twins that mimic the physical appearance, voice, mannerisms, and gestures of real people.
- Skelter Lab: The AIQ chatbot at Skelter Lab aims to provide an affordable and effective chatbot that helps to grow small businesses around the world. Users using the AIQ chatbot are able to get answers to their questions quickly without navigating a series of sub-questions. The chatbot is delivered in the form of a project contract which allows personalized services, accommodating businesses of different sizes in different industries.
Key Takeaways
South Korean chatbot companies are attracting a lot of investors in Asia. They typically offer multiple languages and aim to be cost-effective. The high internet penetration in South Korea means that it would be ideal to integrate chatbots with popular social media platforms such as KakaoTalk to make them most accessible to customers. As online shopping in South Korea becomes more sophisticated, excellent automated customer service will become a key differentiator for your business. You should start exploring options like chatbots at Algomo which is not only easy to manage but also insightful in providing key data analytics to boost your business performance.
