Savings banks, capital firms join fray to court foreign residents

Foreign workers harvest cabbage in fields around Pyeongchang, Gangwon Province, Tuesday. Yonhap

Financial services for foreign residents in Korea, once dominated by banks, insurers and card companies, are now expanding into a wider range of financial institutions, including savings banks and capital firms eager to tap into new growth opportunities, industry officials said Tuesday.

As of 2024, Korea is home to about 2.65 million foreign residents. With their spending on the rise and demand for better financial services increasing, financial institutions are stepping up efforts to attract this market with tailored products and services.

However, amid growing concern over delinquency rates, savings banks and capital firms are focusing primarily on clients who can provide solid collateral or verifiable income.

JB Woori Capital has expanded the range of foreign residents eligible for its used car installment and auto-backed loan products.

Previously limited to F-series visas, which primarily cover overseas Koreans and marriage migrants, the offers now include H2 visas for work and visits, E7 visas for specific activities and E9 visas for nonprofessional employment.

The company has also improved accessibility for foreign clients, opening a dedicated branch in Suwon, Gyeonggi Province, and is planning to add Vietnamese to its electronic contract translation system, which currently supports English, Chinese and Russian.

Capital firms are also increasingly targeting the foreign financial market to diversify revenue streams, as traditional business areas face downward pressure. Defaults in the real estate project financing sector, once a key profit driver, and intensified competition in the used car installment financing market have made growth in conventional areas more challenging.

“Relying only on domestic clients restricts growth. In search of new business opportunities, we have identified the foreign resident market as a promising area and are preparing customized products,” an official from the capital industry said.

Project financing loans have remained a persistent concern, with a rise in nonperforming loans since late 2023 prompting fears about the stability of financial institutions and the broader market.

Savings banks, facing similar challenges, are also looking to expand their customer base by targeting foreign clients. They plan to leverage their experience in providing mid-interest loans to mid- and low-credit borrowers to serve this emerging market.

OK Savings Bank offers a loan product specifically for E9 visa holders, while KB Savings Bank provides the “kiwi Dream Loan” for foreign workers. Welcome Savings Bank has launched a dedicated all-in-one account and debit card for foreign residents.