Value context and insight. lkm@koreatimes.co.kr
Banks close branches, impacting seniors, people with disabilities, and rural areas
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By Lee Kyung-min
Leading commercial lenders are shuttering branches, despite the recommendation of the country’s top supervisory authority against the digital divide, market watchers said Tuesday.
Accelerating the collective action is widespread use of contactless online banking and reduced demand for cash withdrawals.
Banks say reducing the number of bank branches are inevitable due to profit concerns and the digitization drive. However, the Financial Supervisory Service (FSS) maintains the rapid pace of the move could lead to neglect of financially underprivileged groups, including older adults, people with disabilities and residents in remote rural areas.
The number of bank branches for every 100,000 adults came to 12.7, below the Organization for Economic Cooperation and Development (OECD) average of 15.5. For context, the figure for the U.S. and Japan came to 26.6 and 33.7.
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According to Woori Bank, it plans to shutter 21 branches nationwide.
The lender said the measure will transition to an increase in “Digital Express” branches characterized by artificial intelligence-mediated services for opening accounts, taking out loans and making overseas remittances.
NH NongHyup Bank plans to shutter 38 branches.
Branches in Seoul and surrounding regions will see the most closures.
Shinhan Bank will also integrate five retail branches with corporate branches.
Meanwhile, FSS Gov. Lee Bok-hyun criticized the lenders for prioritizing immediate profit motives over long-term enhancement in customer experience.
“Vulnerable consumers continue to see their financial services declining,” he said during a meeting at the Korea Federation of Banks headquarters in Seoul.
“The financial industry must ensure equal services for the group whose access is not as easy as most. Education and infrastructure should be strengthened to serve all customers.”
FSS data showed that the number of bank branches totaled 5,690 as of the end of October, a decrease of 1,189 branches over the past five years.