[Darkened Bank Branches] Gangnam and Myeongdong Also Closing... 110 Locations Withdrawn in Q1 This Year

Bank Branches Hit Hard by COVID-19
Key Commercial Areas Like Gangnam See Consecutive Closures
98 Locations Closed in Seoul Last Year Alone
Branches in Elderly-Rich Rural Areas Also Targeted for Closure

[Asia Economy Reporters Kiho Sung, Sunmi Park] The area around Gangnam-gu Office, known as the luxury shopping district mecca of Seoul, ranked 70th among the 'Top 100 Shopping Districts Nationwide' last year. This ranking dropped 13 places compared to the previous year due to the direct impact of COVID-19. It was the largest drop among major shopping districts in Seoul. As the floating population sharply decreased, major brand stores closed, and bank branches also began to withdraw. Only near Gangnam-gu Office, Shinhan Bank (Gangnam-gu Office Branch), Woori Bank (Eonju Station Branch), and NH Nonghyup Bank (Hakdong Station Branch) closed last year.

In the Dongnae Station area, a central shopping district representing Busan, four bank branches withdrew last year. Hana Bank Sajik Central Branch and three regional bank branches closed. The Dongnae Station shopping district (60th → 73rd) was one of the places where the ranking dropped significantly among the top 100 shopping districts nationwide last year, along with the Busan Station shopping district. Due to regional hollowing out and shopping district decline, store profits decreased, leading banks to be included in the 'closure list.'

Last year, as bank branches were rapidly merged or closed, the phenomenon of branch closures was particularly evident in declining shopping districts. In areas where the floating population noticeably decreased, customer accessibility to each branch declined, leading to worsened branch profitability.

According to the financial sector on the 10th, last year, the five major commercial banks?KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup?closed or merged a total of 251 branches. This number exceeded the 222 branches planned for closure reported to the Financial Supervisory Service in August of the same year.

By region, Seoul saw the largest reduction with 98 branches closed. In Gyeonggi Province, which has the largest population nationwide, 62 branches were closed, followed by ▲Busan 17 branches ▲Gyeongbuk 12 branches ▲Gyeongnam 12 branches ▲Daegu 9 branches. The regions with the fewest closures were Jeonbuk and Sejong, with only one branch closed in each.

Bank branch closures mainly occurred in areas where local shopping districts declined or economic viability deteriorated. This is also confirmed by shopping district analysis statistics. According to SK Telecom's big data analysis platform 'GeoVision,' the 'Top 100 Shopping Districts in Korea in 2021' showed that 11 districts dropped more than 10 places compared to the previous year. Seoul had the most with six districts, followed by Gyeonggi with two, Busan with two, and Jeonnam with one. The decline in local shopping districts showed a similar trend to the reduction in bank branches. In fact, in Busan, where the second most bank branches disappeared after the metropolitan area last year, only one of the nine 'Top 100 Shopping Districts' (Beomil-dong) saw its ranking rise. Three districts maintained the same ranking as the previous year, and five districts saw their rankings fall.

The situation is not much different in Gyeongbuk and Gyeongnam. In Gyeongbuk, where 12 bank branches disappeared, only two districts made it into the 'Top 100 Shopping Districts.' Even these were ranked low overall, at 89th (Jungang-dong, Gyeongsan City) and 99th (Sangdae-dong, Pohang City). Notably, Gyeongnam did not have any districts listed in the 'Top 100 Shopping Districts.'

A bank official said, "Bank branch closures are decided considering profitability, cost efficiency, and shopping district decline." Another bank official added, "Even in metropolitan cities with relatively high population density, the rise and fall of shopping districts vary. Branch closures are expected to increase in rural areas with high aging rates where digital accessibility is low."

Meanwhile, bank branch mergers and closures are expected to accelerate further this year. The five major banks plan to close 110 branches in the first quarter alone. This corresponds to about half of last year's total closures. A bank official said, "As the pace of digital transformation accelerates, branch closures are inevitable for survival."

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