Woori to close 30 branches every year

Woori Bank CEO Sohn Tae-seung answers questions at a recent press conference at the bank's headquarters in Myeongdong, downtown Seoul, in this file photo. Korea Times file

By Kim Yoo-chul

Mobile banking is leading to the removal of physical bank branches as more and more customers are using their smartphones and other devices to manage their financial needs.

In response, Woori Bank is in talks with its union to reduce its branches nationwide.

“The key issue is how to redefine and reassign tasks of traditional tellers at the bank's local locations, those who will be affected by the bank moving to have fewer branches,” a representative of the union said Tuesday.

Woori Bank said customers will see the bank continue to focus on migrating more of its transactions to a digital format. “Woori Bank is rethinking branches from the ground up to save costs and improve management efficiency,” a bank official said.

Woori plans to close down up to 30 branches, annually; however, the official said there would not be any large-scale layoffs.

Many of the details surrounding Woori's plan have yet to be fixed as management is aimed at reaching a consensus with the union on the issue before implementation. Once the plan receives majority backing from the union, then it will take effect.

Woori said the move doesn't mean that branches are doomed.

“Even in this day and age of digital channels, the majority of new accounts are opened and activated at branches. More importantly, complex issues are still addressed and solved at them, in person. What we think of as branches do need to change, though. The upcoming revamp will encompass Woori Bank's entire retail network over the long-term,” said the official.

As of March this year, Woori had 880 branches in Korea, up from 876 last year but a cut by 14 from 2016.

In a related note, an official at KEB Hana Bank said the bank has been operating a taskforce as it needs to redefine what a branch looks like and what it provides for customers.

Like Woori, KEB Hana is rethinking its retail strategy. It said the issue is about “right-sizing,” not necessarily downsizing the branch, even though there are some shortcuts involved.

“Branches and tellers will remain a crucial part of banking, however, their traditional roles should be redefined to support more complex and demanding financial decisions as opposed to simple transactions that customers can process online. It's more about rightsizing the branch infrastructure,” said a KEB Hana offical.

In the first quarter of this year, KEB Hana had 766 branches, a decrease of 8 percent from the previous year. It said the bank plans to reduce that number to 750 by the end of 2018.

“Prior to mobile banking, obviously, online banking had an impact, but I think we're seeing a greater impact with mobile,” said David Albertazzi, a senior analyst at Aite Group, a Boston-based consulting firm. “It's starting to force banks to rethink their retail branch infrastructure. They are moving basically from a transactional to a more relationship building model similar to what you've seen in the retail industry.”