Pop-up bank branches the way to go?

BNK Kyongnam Bank operates a pop-up branch in this file photo. / Korea Times file

By Kim Bo-eun

The Financial Supervisory Service (FSS) proposed Sunday that banks come up with alternatives such as pop-up bank branches in the event they close down branches in rural areas which makes access to financial services difficult, particularly for the elderly.

The plan comes as the authority and lenders have been in conflict over shutting down branches in recent years.

Lenders have been reducing branches to cut costs in the digital era as many services that formerly required visiting a branch are now accessible online. The FSS has warned banks against excessive downsizing of branches, citing this would affect senior citizens in rural areas for whom accessing bricks-and-mortar branches will become increasingly difficult.

The authority said lenders should consider setting up infrastructure that would be able to provide financial services for senior citizens in the event of a branch closing in a certain area.

The FSS proposed the lenders could operate the pop-up branches in the form of buses that are stationed in a certain area throughout the week.

Existing bank branches could also be substituted by smart branches without human employees, the regulator said. At such branches, customers would be able to make transactions, based on video or telephone calls with bank employees loacted off-site.

The FSS said lenders can also partner with Korea Post, as the state-run postal service operates over 2,500 branches nationwide. This compares with commercial banks, which now operate around 6,700 branches across the country.

The FSS noted that Korea Post's branches show an appropriate balance in regional dispersion, in comparison to bank branches, with 50 percent of their branches concentrated in Seoul and the surrounding metropolitan area.

Four banks including Industrial Bank of Korea (IBK), Korea Development Bank (KDB) and Citibank have already formed partnerships with Korea Post to offer bank services at the postal service's branches.

The FSS said the model of offering substitutional infrastructure refers to the case in the U.K., whereby authorities have directed banks to offer substitutional services in the form of video telebanking, partnerships between banks and pop-up branches in the event they close a branch.

The authority also advised lenders to develop mobile banking apps catering to senior citizens. The apps would show larger text, offer voice recognition services and employ a simpler design, mainly incorporating services that the elderly usually seek.

In the meantime, the FSS said it would introduce a stricter process for when banks seek to close down branches. It said lenders, along with an outside expert, need to analyze the age group of the customers of the branch they intend on closing and whether substitutional services would be available.

The regulator also said banks need to notify branch customers three months before the branch is shut down.

"We intend on offering a proposal that seeks to enable convenient and safe financial services for senior citizens," the FSS said.