Brokerages close branches on online trading

The number of branches run by brokerage firms here has continued to decline over the past few years amid an increase in online trading, data showed Sunday.

Data from the Financial Supervisory Service showed the number of branches nationwide stood at 928 as of June in 2019, down 73 from the year before.

This is the first time the number has fallen below 1,000. It peaked at 1,816 in 2012 and has since declined to around 1,100 in 2015. Mirae Asset Daewoo, which has 97 branches as of June, led the drop after shutting down nearly 40 percent, or 63 branches, over the past year. Besides the industry leader, KB Securities reduced its number to eight branches.

Fewer branches means fewer new hires and more early retirees.

Mirae Asset Daewoo had 4,244 workers as of June after letting 327 senior workers go early this year as part of a company-wide workforce reduction carried out in the form of “voluntary retirement.”

Shinhan Investment Corp. in January accepted similar requests from those born before 1975. While specifics remain unclear, at least 30 have left.

Following the move by the industry leaders, many of their competitors are likely to consider pushing out “costly” older workers to keep labor costs under control.

The number of workers at the brokerages was 35,642 as of June, down 108 from the year before. This was down about 20 percent from 2011 when the number was over 44,000.

Meanwhile, the prospect of new hires in the second half continues to be bleak, due to a notable drop in income in the first half.

Korea’s 10 leading brokerages plan to offer only around 300 positions, about half the number offered in 2018.

The reduction came after they saw a combined 1.7 trillion won ($1.4 billion) in fees in the first six months of 2019, a 34.9 percent drop from 2.6 trillion won the year before.

Their poor performance is the result of deteriorating investment sentiment triggered and protracted by the U.S.-China feud, which is pushing an increasing number of investors to turn against the once-booming, highly volatile financial market.

“Assets management is undergoing what is essentially a paradigm shift,” Sung Tae-yoon, an economist at Yonsei University, said.

“More helpful information is available online and tech-savvy customers nowadays are in need of quality information about companies and market developments and less in-person consultation,” he said.

Unless the officials are able to help with investment information online searches cannot give, they will have no competitive edge, Sung said.

“Many financial groups are expediting digitization, the gist of which drives financial services official to create more high-value work. Simple menial tasks will disappear faster.”