Banks in dilemma over branch downsizing

Banks are in a difficult position as the increasing use of mobile banking is eliminating the need for brick and mortar branches, but shuttering these limits their provision of services for the elderly.

Data show that banks have been downsizing the number of branches as a means to reduce costs and adapt to the digital era.

According to the Financial Supervisory Service, the number of branches fell to 6,743 in June this year from 7,186 in September 2015.

Among them, Citibank Korea closed 68 percent of its branches; KEB Hana bank, 20 percent; Standard Chartered (SC) Bank Korea, 13 percent; Woori Bank, 10 percent; and Kookmin Bank, 9 percent.

The number of ATMs has also decreased from 50,793 in December 2015 to 41,446 in June this year.

Citibank closed 62 percent; SC, 29 percent; Kookmin, 26 percent; and Woori, 24 percent.

This has been driven by the growth in mobile banking. According to data from the Bank of Korea, internet banking, ATMs and telebanking accounted for 91.2 percent of total transactions in 2018.

Only 8.8 percent of transactions took place at banks between customers and bank tellers. Internet banking, in particular, grew 18.7 percent to 53.2 percent from a year earlier.

But the shutdown of branches is seeing a backlash as it is limiting access for elderly customers.

The percentage of the elderly who use internet banking services is low.

Data from unaffiliated Rep. Chang Byoung-wan show people in their 60s and 70s accounted for 1.9 percent and 0.3 percent of customers of the nation’s two internet-only banks — Kakao Bank and K bank.

Elderly people’s use of internet banking services of other banks was also found to be low.

Among people in their 60s, only 22.9 percent used internet banking in 2018, while for those in their 70s the figure was 5.4 percent. This compares with the average of 63.7 percent of all age groups.

Elderly people’s understanding of finance was also below the average of 62.2 points out of 100 of all age groups — those in their 60s scored 59.6 points and those in their 70s 54.2 points.

“Due to the acceleration of technological innovation in the finance sector, elderly people’s limit in access to financial information and their isolation from financial services will emerge as a serious social problem,” Chang said.

He suggested guidelines for financial services be drawn up for the elderly as well as the development of products and services that can heighten access for them.

Meanwhile, banks say they are doing what they can.

“Before we shut down a branch, we conduct research for months on the impact it will have on customers,” a bank official said.

“We are also developing the easiest form of mobile banking services to enable the elderly to use them.”