Banks Unable to Sell Funds Ignite Fierce Competition to Attract Housing Subscription Savings (Comprehensive)

Fund Trust Declines Amid Series of Accidents
Bank Sector Struggles to Increase Non-Interest Income
Attractive Fee Income from Recruiting Housing Subscription Savings Subscribers
Hot Apartment Subscription Demand Favors Subscriber Recruitment

[Asia Economy Reporter Park Sun-mi] "Due to the private equity fund scandal, trust in bank funds has plummeted, causing non-interest income to sharply decline. There is indeed pressure to increase the number of subscribers to the Housing Subscription Savings account immediately." (A Bank deposit officer)

As banks find it difficult to increase commissions from financial product sales following a series of private equity fund incidents, they are actively competing to attract new subscribers to the Housing Subscription Savings account as an alternative. This is because they can earn commission income by acting as a sales channel for the Housing Subscription Savings without incurring costs, while also securing potential future customers.

According to the financial industry on the 14th, major commercial banks have launched a competition to attract subscribers to the Housing Subscription Savings to increase non-interest income. Typically, bank commission income consists of bancassurance, fund sales, trusts, foreign currency, and fund consignment. However, due to the sharp decline in sales caused by the private equity fund redemption crisis and limitations such as the '25% rule' in the bancassurance sector, banks have shifted their focus to increasing subscription savings.

A representative from B Bank explained, "Although the income from Housing Subscription Savings does not constitute a large portion of total commission income, there is intense competition to devise event strategies to prevent losing new subscribers to competitors. Housing Subscription Savings customers are likely to become long-term clients, so banks cannot afford to lose them."

In the case of C Bank, the increase in subscription demand aiming for 'lottery-style apartment sales' has led to a 10% rise in subscription-related commission income compared to the first half of last year. As a result, the proportion of fund consignment commissions in total commission income increased from 3.25% to 3.68% by the end of the first half.

Banking Sector Faces Shrinking Interest Margins
Earning Commissions by Attracting Housing Subscription Savings Subscribers 'Profitable'

Currently, with market interest rates falling, the net interest margin (NIM), a core profitability indicator for banks, continues to decline. As of the end of Q2, the NIMs of the five major banks were at record lows: NongHyup 1.67%, KB Kookmin 1.50%, Shinhan 1.39%, Hana 1.37%, and Woori 1.34%. While banks need to increase non-interest income to defend profitability, the private equity fund scandal has narrowed the channels for doing so.

In this situation, when customers subscribe to the Housing Subscription Savings, banks can receive subscription commissions from the Korea Housing & Urban Guarantee Corporation without additional cost burdens, as well as separate monthly maintenance fees. This is why competition to attract Housing Subscription Savings subscribers is heating up in the banking sector. Since subscription savings customers may use other bank services such as loans, securing future customers is an added bonus.

Apartment Subscription Fever Rises Amid Real Estate Investment Boom

The strong enthusiasm for apartment subscriptions creates a favorable environment for banks to attract new subscribers, further intensifying competition.

According to the Korea Real Estate Agency's Subscription Home data, as of the end of July, the number of Housing Subscription Savings subscribers reached approximately 24.84 million, the highest ever. This is an increase of over 150,000 from 24.68 million at the end of June. The Housing Subscription Savings is a 'universal subscription account' that generates subscription rankings and allows applicants who meet the qualifications for each housing type to apply for both private and public housing. Subscribers can freely deposit between 20,000 KRW and 500,000 KRW monthly, making it a low-burden option.

As competition intensifies and the subscription winning cutoff score (minimum points) soars, the perception that one must join the Housing Subscription Savings as early as possible is spreading. The average cutoff score for 12 complexes with subscriptions in Seoul during July and August was 62.7 points. The current maximum subscription score is 84 points, with important factors including the period of being without a home (maximum 32 points), number of dependents (maximum 35 points), and subscription account duration (maximum 17 points). Many people who have already obtained apartment pre-sale rights using the Housing Subscription Savings are also subscribing to new accounts to prepare for the future.

Active Events for New Housing Subscription Savings Subscribers in the Banking Sector

Given this situation, three of the five major commercial banks have launched campaigns to attract new Housing Subscription Savings subscribers.

KB Kookmin Bank, considering that many young people want to prepare their subscription savings in advance for home ownership, has been running a Housing Subscription Savings event since the 1st of this month targeting customers born between 1982 and 2001 (ages 20 to 39). From this day, KB Kookmin Bank also launched the 'KB Mobile Branch' service, allowing customers to subscribe to financial products, including Housing Subscription Savings, without using an app or digital certificate, enabling non-face-to-face subscriptions.

NH NongHyup Bank also started an event this month offering prizes such as laptops, gift certificates, and coffee gifticons to new Housing Subscription Savings subscribers who register for automatic transfers. With 500 subscribers close to being reached, the bank aims to sharply increase the number of subscribers through this event. Woori Bank is offering clothing dryers, air purifiers, and health supplements to new subscribers of both the Housing Subscription Savings and the Youth Preferential Housing Subscription Savings until the end of next month.

Even banks that do not hold prize events are trying to attract subscribers by offering various services to Housing Subscription Savings account holders. Shinhan Bank, after adding a housing subscription consultation service to its app, has enabled non-face-to-face subscription to the Youth Preferential Housing Subscription Savings through the financial sector's first electronic document wallet service starting this month, eliminating the need to visit administrative offices.

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