The Financial Sector Changed by 'Corona19'... Bank and Insurance Agents Say "We Prefer Transactions Without Face-to-Face Meetings"

Surge in Product Subscriptions via Bank Apps
Insurance Companies Also Recommend 'Contactless' Methods

[Asia Economy Reporters Minyoung Kim and Hayoung Ki] The spread of the novel coronavirus infection (COVID-19) is changing the culture in the financial sector. As people refrain from going out, the number of customers visiting banks has decreased, while non-face-to-face transactions such as internet banking and mobile banking have increased. Insurance companies have also advised insurance planners to conduct non-face-to-face sales in preparation for any emergencies.

According to the financial sector on the 27th, non-face-to-face banking transactions have surged since the spread of COVID-19 in South Korea. Between the 19th and 25th of last month, the number of new subscriptions to deposit products through the smart banking application (app) of Bank A was recorded at about 67,280 cases. This is approximately a 58% increase compared to about 42,560 cases during a similar period last year (January 20 to February 28, 2019).

Focusing on the third week of February (16th to 22nd), when confirmed cases rapidly increased, new subscriptions during this period were about 11,260 cases, which is about 68% higher than the same week last year (17th to 23rd, about 6,690 cases). Deposit products refer to checking and savings account openings, deposits, installment savings, and comprehensive housing subscription savings.

During the period around the first confirmed COVID-19 case in South Korea on the 20th of last month (January 19 to February 25), non-face-to-face new transactions averaged about 1,740 cases per day. During a similar period last year (January 20 to February 28, 2019), about 1,060 cases were conducted daily.

Bank B also saw an increase in total non-face-to-face transactions. Between the 16th and 22nd, transactions (inquiries, transfers, account openings, etc.) across all non-face-to-face channels such as internet banking and smart banking apps at this bank reached about 10 million cases, up from 8.6 million cases during the same period in 2018 and 9.6 million cases last year.

On the 21st, when the opening of Tapgol Park was suspended to prevent the spread of COVID-19, the area near Tapgol Park in Jongno-gu, Seoul, showed a quiet scene. Photo by Jinhyung Kang aymsdream@

On the other hand, visits to branches have noticeably decreased since the COVID-19 outbreak. A banking sector official said, “It is estimated that the number of visiting customers has decreased by about 30%,” adding, “Especially, customers visiting branches in the Daegu and Gyeongbuk regions, where confirmed cases are rapidly increasing, have sharply declined.” Another financial sector official said, “The increase in mobile app subscribers over the past year has contributed to the rise in non-face-to-face transactions,” but also noted, “Since the COVID-19 outbreak, more customers are trying to handle banking tasks non-face-to-face.”

Insurance companies are also preparing to increase non-face-to-face sales. Major life insurance companies including NH Nonghyup Life, Samsung, Hanwha, and Kyobo have already encouraged their planners to conduct non-face-to-face sales.

The issue lies in sales capability. In the case of insurance companies, there are concerns that the heavy reliance on face-to-face channels could be fatal to performance, unlike banks. As of November last year, the proportion of first insurance premiums (initial premiums paid) subscribed through face-to-face channels accounted for 97.97% among life insurance companies.

Due to the nature of insurance products, which have complex structures and few cases of voluntary subscriptions, the recommendation and persuasion by planners are essential for subscriptions. Since planners cannot meet customers directly, sales are inevitably hit hard. Insurance companies have mandated planners to wear masks and frequently use hand sanitizers, but there are also reports that customers are reluctant to meet planners.

An insurance industry official said, “Since insurance sales are mainly face-to-face, if planners conduct aggressive sales and get infected, it could backfire, so we are recommending non-face-to-face sales to planners. However, since planners’ livelihoods are at stake, it cannot be enforced,” adding, “If the spread of COVID-19 continues, performance will inevitably be affected.”

This content was produced with the assistance of AI translation services.