The reduction of physical branches by savings banks is extending beyond regional areas to major commercial districts in Seoul and the surrounding metropolitan area. As online financial transactions become commonplace, large savings banks and financial holding companies are increasingly closing branches. This shift towards 'branchless savings banks' is being recognized as a rapid move towards cost efficiency.
According to the Financial Supervisory Service's financial statistics information system, the number of savings bank branches (excluding headquarters) nationwide was 153 at the end of the first quarter of this year, a decrease of 24 from the same period last year.
In the second quarter, three additional branches were closed: OK Savings Bank's Iksu branch, JT Friends Savings Bank's Jamsil branch, and Woori Financial Savings Bank's Euljiro Entrance branch. No new branches opened during this period. This brings the total number of closures to 27 over the past 15 months since March of last year.
The branch reductions are not limited to regional areas. According to the Korea Federation of Savings Banks, of the 25 branches closed from April of last year to June of this year, 11 were in Seoul and 4 in Gyeonggi Province, accounting for 60% of the closures in the metropolitan area. Major commercial districts, including downtown Seoul and Gangnam, were not exempt.
SBI Savings Bank has closed its Jongno, Olympic, and Pohang branches, while Korea Investment Savings Bank has shut down its Jamsil, Digital Seohyeon, and Gwangmyeong branches. Other closures include KB Savings Bank's Yeouido branch and Daol Savings Bank's Apgujeong branch, indicating a trend of branch efficiency across both large firms and financial holding companies.
Savings banks are striving to reduce fixed costs such as rent and labor as the number of customers visiting branches declines due to the rise of online transactions. A representative from a savings bank that reduced its branches stated, "With the emergence of fintech, the focus of lending and deposit services is shifting online, prompting us to reduce the number of branches for operational efficiency."
The industry estimates that about 70% of savings bank operations are conducted online. The COVID-19 pandemic has accelerated the use of online savings and loan services, and the practice of offering preferential interest rates for online products has become widespread. A financial industry representative noted, "As experience with online banking increases, there has been a significant rise in mobile banking usage among customers in their 50s and 60s."
However, there are concerns that continued branch reductions may decrease financial accessibility for older adults who are not accustomed to mobile banking. The representative added, "Among older customers, there are still many who feel secure only when they can visit a branch in person. We need to consider ways to minimize the inconvenience for digitally vulnerable groups during this process of branch efficiency."
* This article has been translated by AI.
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