By Na Jeong-ju
Banks are slimming down their offline sales networks amid falling profitability and rising demand for online banking.
According to the Bank of Korea (BOK), Tuesday, the number of branches operated by commercial banks here stood at 5,682 as of the end of last year, down 54 from a year earlier.
This was the first time in four years that more branches were shut than new ones established.
The move is part of banks' efforts to realign their business portfolios.
"We have closed underperforming branches and relocated the staff to other branches and online banking departments," a KB Kookmin official said on condition of anonymity.
Analysts forecast banks may close more branches in the coming years because services via the internet and smartphones are becoming more popular.
KB Koomin, which operates some 1,200 branches, plans to readjust the locations of some branches after combining unprofitable ones. It will instead set up automated telling machines in places where the branches were located.
Restructuring has hit virtually all sectors of the financial industry ― banking, insurance, brokerages and credit card businesses ― as they struggle to find new revenue sources amid an uncertain outlook.
Increased competition and the government's tougher regulatory stance are also adding pressure, analysts say.
The BOK said some 200 branches operated by life insurance companies disappeared last year ― the total number of branches stood at 3,951 as of the end of last year.
Foreign banks here have also closed branches as part of plans to realign their business portfolios in the Korean market.
Last year, HSBC Korea said it would shut down 10 of 11 branches. Citibank Korea also closed 22 branches.
Standard Chartered Bank Korea plans to close 100 of 350 branches nationwide.
The closure of financial firms' branches may lead to reduced job opportunities.
"In recent years, they have cut jobs and closed offices," an industry source said. "They are finding it increasingly difficult to attract talent because people no longer think they offer secure jobs. That may lead to a deterioration of their growth potential."
Bank officials, however, say changing consumer behavior and banking trends are key reasons for the realignment of their offline sales networks.
According to the central bank, as of the end of 2013, the number of subscribers to Internet and mobile banking services at 17 domestic banks totaled 95.49 million. This is up 10.5 percent, or 9.06 million, from a year earlier.
Local banks have provided mobile banking services since 2003, when there were just over 189,000 users.
Industry watchers believe mobile banking will continue to grow at a steep rate, with more people switching to smartphones and tablet PCs for transactions.
The BOK says, electronic banking, which includes transactions via the Internet, phones and ATMs, accounted for more than 80 percent of all transactions last year.
"It seems that mobile banking services are more popular among young customers in their 20s and 30s," a BOK official said. "Convenience is clearly the key to these changes."
Banks are slimming down their offline sales networks amid falling profitability and rising demand for online banking.
According to the Bank of Korea (BOK), Tuesday, the number of branches operated by commercial banks here stood at 5,682 as of the end of last year, down 54 from a year earlier.
This was the first time in four years that more branches were shut than new ones established.
The move is part of banks' efforts to realign their business portfolios.
"We have closed underperforming branches and relocated the staff to other branches and online banking departments," a KB Kookmin official said on condition of anonymity.
Analysts forecast banks may close more branches in the coming years because services via the internet and smartphones are becoming more popular.
KB Koomin, which operates some 1,200 branches, plans to readjust the locations of some branches after combining unprofitable ones. It will instead set up automated telling machines in places where the branches were located.
Restructuring has hit virtually all sectors of the financial industry ― banking, insurance, brokerages and credit card businesses ― as they struggle to find new revenue sources amid an uncertain outlook.
Increased competition and the government's tougher regulatory stance are also adding pressure, analysts say.
The BOK said some 200 branches operated by life insurance companies disappeared last year ― the total number of branches stood at 3,951 as of the end of last year.
Foreign banks here have also closed branches as part of plans to realign their business portfolios in the Korean market.
Last year, HSBC Korea said it would shut down 10 of 11 branches. Citibank Korea also closed 22 branches.
Standard Chartered Bank Korea plans to close 100 of 350 branches nationwide.
The closure of financial firms' branches may lead to reduced job opportunities.
"In recent years, they have cut jobs and closed offices," an industry source said. "They are finding it increasingly difficult to attract talent because people no longer think they offer secure jobs. That may lead to a deterioration of their growth potential."
Bank officials, however, say changing consumer behavior and banking trends are key reasons for the realignment of their offline sales networks.
According to the central bank, as of the end of 2013, the number of subscribers to Internet and mobile banking services at 17 domestic banks totaled 95.49 million. This is up 10.5 percent, or 9.06 million, from a year earlier.
Local banks have provided mobile banking services since 2003, when there were just over 189,000 users.
Industry watchers believe mobile banking will continue to grow at a steep rate, with more people switching to smartphones and tablet PCs for transactions.
The BOK says, electronic banking, which includes transactions via the Internet, phones and ATMs, accounted for more than 80 percent of all transactions last year.
"It seems that mobile banking services are more popular among young customers in their 20s and 30s," a BOK official said. "Convenience is clearly the key to these changes."
![[INTERVIEW] Korean adoptee in Germany reunites with birth family after 42 years](https://img.koreatimes.co.kr/upload/thumbnailV2/fadf7c30b6094a0da6c8adecdcf925ab.jpg/dims/resize/178/optimize)
![[INTERVIEW] Expert pitches Laotian rural reform to solve NK's chronic food shortages](https://img.koreatimes.co.kr/upload/thumbnailV2/3dbbf87782cb48fcabe9d9facc018fca.jpg/dims/resize/178/optimize)
![[INTERVIEW] Forbes-listed entrepreneur pursues partnerships with Samsung, LG, SK to help Ukraine](https://img.koreatimes.co.kr/upload/thumbnailV2/48669e0a9d604c618e245f79eb0b930d.jpg/dims/resize/178/optimize)
![[INTERVIEW] 'Welcome to world of art therapy'](https://img.koreatimes.co.kr/upload/thumbnailV2/K2023032200218_d6cf4825b6c3d.jpg/dims/resize/178/optimize)
