Provincial banks open more digitalized branches

Busan Bank's “Self Branch” in Hakjang-dong, Busan / Courtesy of Busan Bank

By Park Jae-hyuk

Provincial banks are speeding up efforts to transform conventional branches into “digital branches” equipped with smarter ATMs and self-service kiosks, bank officials said Monday.

The banks previously focused more on face-to-face transactions at conventional branches because their customers are, on average, older than major commercial bank customers.

After an increase in non-face-to-face transactions nationwide, however, conventional branches started to face worsening profitability due to the cost of maintaining a larger workforce.

Against this backdrop, regional banks have begun their own digital transformation, as major commercial banks did.

Busan Bank is one example. The subsidiary of BNK Financial Group opened a “Self Branch” in Busan, July 3.

Busan Bank said the Self Branch can handle almost 85 percent of services that conventional branches deal with.

According to the provincial bank, most of the new branch's services are offered on ATMs, mobile devices or tablet PCs, reducing the need for paper.

Compared to a conventional ATM which only allows basic financial transactions, such as deposits, withdrawals and transfers, the branch's ATM enables customers to get credit cards and subscribe to internet and mobile banking services.

The branch therefore has only one clerk who is in charge of loan services.

“Demand for large branches has decreased in this era of digitization and fintech,” Busan Bank managing director Bang Seong-bin said in a press release. “We will continue to come up with futuristic branches tailored to our customers.”

Daegu Bank will open its “digital branch” in August.

According to the DGB Financial Group subsidiary, its digital branch will be a small branch which needs only a couple of clerks. The company said the new branch will be equipped with an ATM which can handle 90 percent of services related to deposits.

“The face-to-face transactions are made only for loan services recently, and most customers make transactions via internet and mobile banking services,” Daegu Bank CEO Kim Tae-oh said at a forum June 28. “Customers are rarely seen at offline branches, so our employees have to visit customers to sell products.”

The CEO said the bank will transform small branches near residential areas into digital branches.

The company, however, will expand the size of branches near busy streets, considering elderly customers frequently visiting those branches.

Jeonbuk Bank and Kwangju Bank, both of which are subsidiaries of JB Financial Group, have yet to make any plans to open “digital branches.”

However, JB Financial Group Chairman Kim Ki-hong said at a press conference July 9 that the two banks will also continue the digitization drive with an open banking platform to maximize investment efficiency and follow the future trends in financial services.