Changing face of securities: Branches close as mobile trading takes over

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It's not just banks that are closing their branches. With mobile trading on the rise, securities firms, struggling in a sluggish business environment, have closed over 50 branches in the past year, shifting their strategies to expanding premium branches that cater to wealthy customers.

According to the Korea Financial Investment Association, Friday, as of the third quarter of 2023, the number of securities branches has decreased to 842, a reduction of 57 compared to the same period last year.

This decline in the number of securities firms is part of a continuing downward trend. The count, which was at 1,026 in 2019, dropped to 981 in 2020, then to 920 in 2021 and further to 883 in 2022, partly due to mergers.

This trend is expected to persist throughout the current year. For example, beginning Monday, Mirae Asset Securities will merge its Myeong-dong branch into the Gwanghwamun branch, and the Samsung Station branch into the Gangnam Tehran Valley branch.

NH Investment & Securities also made a series of mergers in July, including incorporating the Guro branch into Yeouido. Last month, it incorporated three branches in Gwangju as one. Daisin Securities plans to establish a consolidated branch for Shinchon, Sadang, and Gwanghwamun in Yeouido.

The primary reason behind the reduction in the number of physical branches by securities firms is the customer preference for non-face-to-face transactions, utilizing mobile trading systems instead. This trend has led to a lessening of the need for offline branches, which are associated with significant costs, including rent and personnel expenses.

On the other hand, in affluent neighborhoods that are home to wealthy individuals, brokerage firms are opening branches that provide specialized services. The move is aimed at strengthening their high-asset management business.

A prime example of this is evident in an apartment complex in Banpo, Gangnam, which is increasingly recognized as a prime location for the affluent. Five brokerage firms are actively competing here, each striving to establish their dominance in this profitable market.

"High-net-worth individuals tend to be older and often find mobile trading to be burdensome. They also have a preference for receiving consultations from private bankers rather than investing on their own," an official from the brokerage industry said. "Recently, as the performance of securities firms in investment banking and alternative investment has been lackluster, these moves are seen as efforts to strengthen their wealth management sector."