Banks fix eyes on baby boomers

By Jhoo Dong-chan

Commercial banks are engaging in a cutthroat competition to attract the nation's 7 million baby boomers as their retirements start in earnest next year. These baby boomers are the post-Korean War generation born between 1955 and 1963.

Lenders are not only assigning taskforces to accommodate these customers but are also expanding inter-subsidiary cooperation under their financial groups.

KEB Hana Bank said Tuesday it has formed a 15-man taskforce exclusively assigned to the bank's premium pension products. They will offer a one-on-one consulting service for baby boomer customers.

The bank is also reviewing a plan to double the taskforce's size by the end of the year while strengthening its non-face-to-face services to attract more customers.

“It will cost billions of won to introduce the entire system, but KEB Hana Bank has decided to invest money in the sector to secure the market beforehand,” said a KEB Hana Bank official.

Shinhan and KB Financial Group are also enhancing their inter-subsidiary cooperation to strengthen their pension management capacity.

“The baby boomer generation starts retiring in earnest next year. It will be really important for banks to attract these customers. This will determine each bank's future growth engine,” said a KB Kookmin Bank worker.

Thanks to their efforts, the total share of customers in their 60s accounting for banks' assets has steadily grown over the years.

According to KEB Hana Bank, assets of customers in their 60s accounted for 41 percent of the bank's total as of the end of April, up 1 percentage point from a year ago and 2.4 percentage points from two years ago.

Korea's rapid demographic change is also becoming a decisive factor in commercial banks' future business.

The population aged over 65 is expected to reach 680,000 next year. The figure is estimated to be 780,000 in 2024 and 910,000 in 2026. This means 5.35 million people, or 10 percent of Korea's entire population, are expected to enter the pension market over the next seven years.

Considering customers in their 50s preparing for retirement, the market is even bigger than the estimates.

“Commercial banks have done their utmost to attract young customers in their 20s and 30s who have just landed a job. Things will change really rapidly considering the nation's demographic shift,” said a NongHyup employee.

“Customers in their 50s and 60s will soon be the center of not only the nation's pension funds but also the entire financial market.”