Regional banks eye foreign residents to expand sales

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Commercial banks that primarily serve customers in provincial areas are promoting unsecured loans exclusively for expats in a desperate bid to boost sales amid regional depopulation, according to industry officials, Tuesday.

These regional banks face tough competition from major banks headquartered in Seoul as well as internet-only lenders that capitalize on digital access. In response, some have turned to providing unsecured loans for foreigners, which are not available in the mainstream banking sector due to identity verification and other security-related issues.

Jeonbuk Bank is increasing its promotion of unsecured loans that specifically targets foreign residents. JB Bravo KOREA, named after its parent company in Jeonju, North Jeolla Province, first became available in 2016. It allows customers to take out loans following online consultation.

Gwangju Bank, Busan Bank and Kyongnam Bank also have released their own unsecured loans targeting non-Korean residents.

“The products assume a high risk concerning security, but at the same time, it can bring considerable returns, as mainstream banks are not willing to enter the market while the number of foreigners in Korea is increasing,” a PR official at one of regional banks said, asking not to be named.

“Regional banks are therefore likely to develop relevant products,” he added.

Also asking not to be named, a member of a consumer advocate group expressed a similar view.

“More foreigners want to borrow money from domestic banks, and unsecured loans can make their options wider,” she said, referring to data obtained by Kim Hyun-jung, a Democratic Party of Korea (DPK) lawmaker, a member of the National Assembly’s national policy committee.

Data showed the number of foreigners who took out loans from domestic banks increased from 49,902 in December 2022 to 79,524 in January 2024.