[Darkened Bank Branches] Global Trend of Closures... "Need for Measures Addressing Financially Excluded Groups"

"Customized Services and Continuous Guidance Procedures for the Elderly and Disabled"
"Financial Authorities Must Provide Comprehensive Education and Promotion to Consumers"

"Major Countries Prepare Joint Branch Operations, etc."

[Asia Economy Reporters Kwangho Lee, Seungseop Song] With the advancement of information and communication technology and the spread of COVID-19, the financial environment is being reorganized around non-face-to-face transactions, and the continuous decrease in the number of bank branches is a global trend. Major countries around the world are implementing various measures such as operating joint branches and providing financial education to prevent financial exclusion among certain groups.

According to the report "Challenges for Bank Branch Reduction and Protection of Financially Excluded Groups" released by the National Assembly Legislative Research Office on the 10th, the number of bank branches in the UK decreased by 37%, from 11,365 in 2007 to 7,207 in 2017. In response to inconvenience in using financial services and opposition, the UK operates joint branches by utilizing the post office network, where multiple banks open branches within post offices.

In Japan, although the prevailing opinion is that branches are essential to maintain contact with customers, environmental factors such as population decline and aging, prolonged low interest rates, increased non-cash payments, and technological advancements have made branch network reorganization a financial issue under discussion. Accordingly, regional banks have signed agreements to operate joint branches, reduce branch functions to reallocate personnel, or separate branches by function to convert them into specialized branches.

In New Zealand, six banks have been operating joint automated teller machines (ATMs) on a pilot basis through community partners such as pharmacies, tourism organizations, and district councils in small local towns from 2020 until November last year. Additionally, efforts are being made to increase the convenience of joint ATM use for the elderly by deploying auxiliary personnel.

"Financial Authorities Need Policy Consideration"

Domestic experts agree that branch reduction is inevitable as big tech (large information technology companies) and fintech (financial technology companies) expand their financial service entries and the financial environment is reorganized around non-face-to-face transactions. However, they emphasize that policy consideration by financial authorities is necessary because neglecting financial exclusion caused by branch reduction could lead to some groups being left out, resulting in social problems.

Professor Daejong Kim of the Department of Business Administration at Sejong University said, "Branch reduction is an unavoidable global trend and one of the survival strategies banks must choose." He added, "South Korea has the highest smartphone penetration rate and well-developed communication infrastructure, which has strengthened the competitiveness of internet banks born in this environment, and commercial banks must compete accordingly. Although financial authorities are trying to prevent rapid reduction, it is difficult to completely stop the trend." However, he noted, "The elderly may become particularly inconvenienced, so the government should simultaneously implement policies such as smartphone education and device distribution." He added, "The smartphone penetration rate among people in their 60s and 70s is also increasing to an all-time high. Continuous implementation can significantly mitigate side effects."

Researcher Koo Hyun Lee of the National Assembly Legislative Research Office emphasized, "More fundamentally, efforts are needed to provide transaction methods designed for easy use by the elderly and disabled, considering changes in the financial environment, and to conduct appropriate financial education to help financially excluded groups avoid being left out in the changing financial market." He said, "Examples include building elderly- and disabled-friendly user interfaces (UI) currently under study, strengthening customized services for different user groups, and enhancing guidance for the elderly and disabled at counters." He stressed, "Customized services and continuous guidance procedures should be established for users who find it difficult to adapt to changes in the financial environment."

In this regard, Jo Yeonhaeng, chairman of the Financial Consumer Federation, pointed out, "Ultimately, it is a conflict of interest issue," saying, "The banking sector pursues management profits by operating branches only where profitability exists and closing those that decline." He also said, "Neglecting customers due to decreased convenience undermines public interest," and added, "Finance is an industry but one that requires government approval. It should not pursue profit unconditionally but also consider public interest." He further stated, "Above all, some groups unfamiliar with digital technology need time to become accustomed, but the current pace is too fast." He concluded, "A balance that considers public interest to some extent is necessary, and financial authorities should provide comprehensive education and promotion to consumers."

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