Banking Sector to Resume 'Suspended' Non-Face-to-Face Services Soon... Accelerating Branch Reduction? (Comprehensive)

Calls for Expanding Internet Bank Establishment Following Enforcement of the Financial Consumer Protection Act...
Accelerated Branch Reduction Amid Expansion of Non-Face-to-Face Services in the Banking Sector

[Asia Economy Reporter Park Sun-mi] Some non-face-to-face financial services in the banking sector, which were temporarily suspended due to the construction of a computer system reflecting the Financial Consumer Protection Act (FCPA), will resume normal operation from the end of this month. With the enforcement of the FCPA, non-face-to-face sales of financial products are preferred over sales at branches, and the atmosphere for expanding the establishment of internet-only banks is growing, increasing the likelihood that the already decreasing number of bank branches will shrink even faster in the future.

According to the banking sector on the 12th, Woori Bank plans to resume some services of the smart kiosk (unmanned terminal), which were temporarily suspended on the 25th of last month due to the enforcement of the FCPA, by the end of this month. Woori Bank had suspended new transactions such as deposits, funds, and credit cards through kiosks due to the construction of a computer system applying the contents of the FCPA. The system construction work is currently underway, and normal service operation will be possible from the end of this month.

Hana Bank will also resume some suspended services this month, including Hana Online Sajangnim credit loans and Plus mobile guaranteed loans, which are non-face-to-face exclusive products. The Hi Robo Fund new subscription and rebalancing services are scheduled to resume normal operation from the 10th of next month. The resumption date for subscription to savings and deposits through the Hi Chatbot has not yet been decided.

In the case of Kookmin Bank, new deposit and withdrawal account services through the Smart Teller Machine (STM) will be provided again from the end of this month. Earlier, Shinhan Bank has been accepting applications for some internet banking loan products, which were suspended due to the enforcement of the FCPA, normally since last week. However, the resumption of new account issuance, savings and deposits, and subscription services through smart kiosks has been postponed until the end of September.

NongHyup Bank will resume non-face-to-face new subscriptions for pension savings funds and the fund batch new subscription service (portfolio), which allows subscribing to multiple funds at once, as early as this month or by next month at the latest. In addition, the artificial intelligence (AI) robo-advisor service is scheduled to resume operation from May.

[Image source=Yonhap News]

Expanding Non-Face-to-Face Services
Bank Branch Reduction Also ‘Ongoing’

As banks gradually normalize the non-face-to-face services temporarily suspended during the application of the FCPA, the pace of expansion of non-face-to-face services in the banking sector has accelerated even more.

The FCPA includes stringent provisions from the seller’s perspective, such as the ‘principle of legality,’ which requires recommending only products that reflect the customer’s investment propensity. Since bank branches must provide detailed guidance from A to Z to avoid liability, it often takes a lot of time, leading to frequent encouragement of customers visiting branches to subscribe through non-face-to-face channels.

A bank official explained, "After the enforcement of the FCPA, confusion occurred on-site, so customers are encouraged to subscribe to products through the bank’s application (app) whenever possible," adding, "Even if account opening is done at branches, time-consuming tasks such as investment propensity analysis are encouraged to be handled non-face-to-face."

Since the four major financial holding companies are interested in establishing independent internet-only banks, the expansion of non-face-to-face channels for financial services is likely to accelerate further. This means that traditional financial services conducted at bank branches are gradually losing their place.

The Bankers Association, which has been discussing the necessity of establishing internet banks with financial holding companies, plans to deliver the collected opinions and the results of demand surveys for internet banks from major financial holding companies to the Financial Services Commission’s working-level officials as early as this month. Although the degree of enthusiasm varies, it is known that a considerable number of holding companies have expressed their intention to establish internet banks.

In the banking sector, although financial authorities are putting brakes on the reduction of bank branches through measures such as ‘mandatory prior impact assessment before closure,’ the atmosphere of offline branch consolidation and consequent reduction in the number of branches is expected to continue due to the enforcement of the FCPA and the strengthened demand for internet-only banks. As of the end of last year, the number of domestic bank branches was 6,406, a decrease of 304 from the previous year (6,709). This is the largest decline since 2017 (312 branches).

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