Financial Branches Closed and Workforce Tightened... Card Recruiters Fall Below 10,000 Mark (Comprehensive)

Invisible Workforce Reduction Trends Amid Financial Institution Branch Mergers and Closures
Overall Sales Organization Decline Across Banks, Insurance, and Cards
Card Recruiters Fall Below 10,000 for the First Time Since 2013 Census

[Asia Economy Reporter Ki Ha-young] As financial companies accelerate the consolidation of branches, their sales organizations are also shrinking. Although the closure of financial branches has become a trend due to declining customer usage rates and difficulties in bearing building rents and various management costs, this year, the novel coronavirus disease (COVID-19) has had a considerable impact. In industries where face-to-face sales have become difficult due to a massive shift to non-face-to-face channels such as online and mobile, restructuring of sales organizations has become inevitable.

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Direct Hit from COVID-19... Number of Card Recruiters Falls Below 10,000 for the First Time

According to the industry on the 5th, as of the end of October, the number of credit card recruiters at seven specialized card companies (Shinhan, Samsung, KB Kookmin, Hyundai, Lotte, Woori, Hana Card) was counted at 9,593. This is the first time since statistics began in 2013 that the number of recruiters has fallen below the 10,000 mark. After falling below 20,000 in 2017, half of the recruiters disappeared within three years.

In particular, the decline in the number of card recruiters has accelerated since the second half of the year. From July to the end of last month, 2,110 people quit their jobs. Compared to a total decrease of 1,225 recruiters last year compared to the previous year, this year has already shrunk to nearly twice that of last year. The reduction in recruiters was largely influenced by the increase in non-face-to-face issuance and cost-cutting due to the worsening profitability of card companies. The number of recruiters, which reached 22,872 in 2016, decreased to 16,658 in 2017, 12,607 in 2018, and 11,382 in 2019.

The industry interprets that although the expansion of non-face-to-face channels had an impact, COVID-19 accelerated the reduction of card recruiters this year. Due to COVID-19, people have been reluctant to have face-to-face contact, making it difficult to conduct sales activities in multi-use facilities such as department stores and large marts. A card industry official explained, "As COVID-19 prolonged, recruiters who felt difficulties in making a living seemed to have quit their jobs," adding, "The changing card sales environment, such as an increase in customers receiving cards non-face-to-face, also had an impact." In fact, as of the first half of this year, the online channel credit card application rate of the seven specialized card companies was 37.9%, up 11.3 percentage points from 26.6% at the end of last year.

Sales Organization Restructuring Due to Branch Reduction and Activation of Non-Face-to-Face Sales

The same situation applies to other financial sectors. In particular, the number of life insurance planners, who have a high proportion of face-to-face sales, has significantly decreased. According to the Financial Supervisory Service's Financial Statistics Information System, as of the first half of this year, the number of exclusive planners affiliated with specific life insurance companies was 94,369, down 19.6% (22,942 people) from 117,311 at the end of 2015. A considerable number of insurance planners rely on additional sales through managing existing policyholders or recruiting acquaintances. Accordingly, as the point of contact for accessing and subscribing to insurance information shifts from face-to-face to non-face-to-face due to the expansion of online and mobile consumption, the industry expects the trend of decreasing planners to accelerate further. Especially, the life insurance industry, which is recording low growth, is concerned about negative growth next year. The Korea Insurance Research Institute estimated that life insurance companies' premium income, excluding retirement pensions, will increase by 2.5% until this year but will turn to a 0.4% decrease next year, recording a negative growth rate.

Major commercial banks are also experiencing a decrease in bank employees due to branch consolidation. According to the 'Status of Branch Consolidation of Four Major Commercial Banks' recently submitted by Bae Jin-gyo, a member of the National Assembly's Political Affairs Committee from the Justice Party, to the Financial Supervisory Service, the number of bank employees nationwide decreased from 66,865 in 2015 to 59,295 as of the end of August this year, resulting in the loss of 7,570 jobs amid the trend of branch reduction. With the digital transformation of banks, IT and digital departments have been newly established, and younger employees prefer to move to digital-related departments rather than traditional deposit and loan-related departments, which were previously popular. Lee Dae-gi, a research fellow at the Korea Institute of Finance, analyzed, "It is premature to conclude that branch closures directly lead to employment reduction, but a common phenomenon in the banking sector is maintaining existing employment through personnel redeployment to headquarters and new businesses while reducing new hires."

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