Banks face complaints over ATM closures
An unnamed customer tries to process a financial transaction using Samsung Electronics' Galaxy S7 mobile payment service at an ATM in downtown Seoul, in this file photo. Korea Times file
By Kim Yoo-chul
ATMs are on the decline as customers go digital. The country's leading lenders said Monday the number of ATM withdrawals is falling fast.
The Financial Supervisory Service (FSS), Korea's top financial regulator, said the combined number of ATMs operated by eight lenders as of last year was 38,553 across the country, down 8.2 percent year-on-year.
“ATM withdrawals have been steadily heading down for several years now and the trend will continue in the next few years as banks are attempting to save operating costs and move toward digital banking,” an official at Woori Bank said by telephone.
Contactless cards, thanks to the rise of mobile and digital banking here, have encouraged customers to “wave and pay” on transport systems, coffee shops and convenience stores, making cash almost entirely redundant for many.
But one flipside is that demand for ATMs still remains high for clients who prefer to withdraw their cash via ATMs near homes, offices and workplaces.
For them, the death of ATMs is massively overstated as ATMs still function as the gateway to protect their money from various types of cyberattacks.
“You can call me a traditional person, but I still prefer to get cash using ATMs because I can use my ATM card to take out the exact amount I need to make a purchase. I don't think I am the only client opposing Shinhan's move to reduce the number of ATMs,” said Park Sang-ryeol, a 38-year-old office worker in Seoul.
Kim Byong-yong, a tech journalist based in Seoul, said he is also a fan of ATMs because of the convenience of paying bills.
“Perhaps it's a sentimental reason. But ATMs allows me to pay bills on time or they act knowing the fact that with a bank card, they would never have to worry about running low on cash,” Kim said.
According to the Bank of Korea (BOK), the country's central bank, the amount of transactions processed via ATMs took up 35.4 percent as of the first quarter of this year, meaning at least three out of 10 preferred to use ATMs for money transactions.
According to an official at Shinhan Bank, a top-tier private lender, the bank has received complaints, mostly from senior citizens, about the bank's move to close ATMs.
“In general, digital and online banking are completely new for seniors as they are dependent upon traditional banking systems. We are taking on the issue,” the official said, adding the bank has to spend more than 14 million won ($12,000) on annual maintenance costs to operate one ATM including its installation. “Basically, ATMs are a money-losing business.”
Banks are teaming up with third-party ATM operators to persuade them to charge reduced processing commissions for cash withdrawals, said bank officials. Usually, customers are asked to pay double the amount of processing fees for withdrawals from third-party ATMs installed in convenience stores, compared to ATMs in banks during day-to-day operating hours.
“Mobile and internet banking can't replace everything. It's a trend banks will cut the number of ATMs, but they have to provide an alternative to customers who are sticking with them,” said Cho Nam-hee, a representative at Financial Consumer Agency.