Banks close down branches amid digitization

By Lee Kyung-min

The number of bank branches in Korea has been on a steady decline due to an increase in non-face-to-face transactions amid digitization.

According to latest data from the Financial Supervisory Service (FSS), the number of branches at the country's 18 commercial banks including the top five ― Shinhan, KB Kookmin, Woori, KEB Hana and HongHyup ― has decreased by 13 percent to 6,771 in 2018 from 7,698 in 2012.

The shutdown has come as a result of an increase in the number of customers switching to internet banking.

Bank of Korea (BOK) Economic Statistics System data showed there were over 146 million subscribers to online banking services including over 137 million individual customers and 9.1 million corporate customers as of the end of 2018.

The figures are nearly double from four years earlier, when there were 81 million individual customers and 5 million corporate customers.

The number of subscribers far outweighs the total population of the country as people use services from multiple banks.

“Many of our customers use the online platform to check balance and wire cash simply because it is far easier and more convenient. And the number of users and transaction volume of online platform-mediated services will increase,” a KEB Hana Bank official said.

The figure is also in line with the country increasingly becoming paperless, with over half of the cash wiring and withdrawal services conducted via online platforms.

BOK data showed that 53 percent of such services were conducted via mobile or online platforms in 2018.

About 87 percent of the balance inquiries were made online, while only 8 percent were made following in-person visits.

In 2018, 3.7 billion cash wiring transactions were made, nearly double from 1.9 billion in 2012.

The number of online requests seeking loans jumped to 4.5 million, over seven-fold increase from 605,000 in 2012.

The amount sought for loans also jumped to 53.4 trillion won in 2018, over 14-fold increase from 3.7 trillion won in 2012.

Banks are opening specialized branches targeting the wealthy or young in affluent neighborhoods or busy commercial districts with newly developed residential areas.

Woori Bank opened a new branch in Jamsil, southeastern Seoul, where a wealth management service is available for customers with at least 300 million won ($258,000) in their account, triple the amount required to use the service.

KEB Hana Bank is seeking to open branches in highly populated areas in commercial districts where cultural services are also available.

These moves are part of broader efforts to attract young customers in their 20s and 30s.

“By granting access to financial services while offering a snack or coffee, or a look at interior decoration items, the sites seek to become a place for rest than for withdrawing quick cash or applying for a loan,” the official said.