[Darkened Bank Branches] Called a Survival Strategy... But Only Fueled 'Conflict' Without Alternatives

Effective Alternatives Must Be Sought to Minimize Financial Exclusion Phenomena

[Asia Economy Reporter Park Sun-mi] While banks have been closing hundreds of branches annually under the pretext of streamlining branch operations, realistic alternatives have yet to be established. Banking services for the elderly, farmers and fishermen, and people with disabilities?who are not familiar with digital finance?are becoming increasingly difficult to access. With the rapid decline of Automated Teller Machines (ATMs), there is an urgent need for clear alternatives and concrete implementation plans.

According to the banking sector on the 10th, Shinhan Bank recently withdrew its plan to close the Wolgye-dong branch in Nowon-gu, Seoul next month and merge it with the nearby Jangwi-dong branch. This was due to strong opposition from local residents, including elderly people who are not accustomed to digital devices.

This is the first case where the rapid closure of bank branches has been halted due to local residents' resistance. Not only local residents but also internal dissatisfaction within banks is growing. Bank labor unions are protesting, stating that the continuous closure of branches is causing job losses due to a decrease in the number of employees.

In response, banks argue that reducing the number of branches is an essential survival strategy that must be chosen for efficient branch operation amid the expansion of digital finance. They claim that as non-face-to-face financial transactions become established, it is inevitable to close branches that are losing efficiency.

The problem is that branch reductions are proceeding without appropriate policy alternatives. Last year, financial authorities established a “Joint Procedure for Bank Branch Closures” to prevent indiscriminate branch closures by banks. Although mandatory prior impact assessments before closures were introduced, these were operated as formalities and failed to provide proper checks.

As a last resort, banks have been preparing measures to alleviate consumer inconvenience starting this year, such as waiving ATM usage fees for the elderly, expanding bank services through video calls, and installing devices in convenience stores. However, it is uncertain how effective these measures will be. According to the Korea Federation of Banks, there are about 8.6 million elderly people aged 65 and over. Five out of ten elderly people visit bank counters to withdraw cash. Ultimately, branch reductions and ATM decreases lead to fewer cash withdrawal channels, causing inconvenience to cash users and the elderly.

The National Assembly Research Service pointed out, "The policies announced by financial authorities to reduce bank branches do not present clear alternatives or concrete implementation plans, and the promotion of joint branches or shared ATMs is also sluggish," adding, "Financial authorities and the industry must seek effective alternatives under the goal of minimizing financial exclusion."

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