"Growing Strengths First" Banks Launch Face-to-Face Innovation to Compete with Big Tech

KB Kookmin Expands 9TO6 Branches... Shinhan Increases Innovative Branch Openings and Expands Digilog Branches

[Asia Economy Reporters Jehoon Yoo and Aeri Boo] Banks are accelerating innovation in branches, which are considered to be on a 'declining path.' The intention is to create innovation starting from branches, the area where they can perform 'best,' in response to big tech and fintech companies armed with platforms and new technologies.

According to the financial sector on the 25th, KB Kookmin Bank will expand its '9TO6 branches' to 72 locations nationwide starting next month on the 14th. The 9TO6 branches operate teller services until 6 p.m., which is usually after the standard bank branch closing time, by flexibly adjusting employees' working hours.

KB Kookmin Bank decided to significantly expand the flexibly operated branches following positive feedback from customers such as office workers for the 'After Bank' branches (Gangnam Central, Umyun-dong, Dongtan Industrial Complex branches), which operated from 12 p.m. to 7 p.m.

Additionally, KB Kookmin Bank plans to operate a 'KB Digital Bank' at E-Mart No Brand Gangnam Terminal store in April. The KB Digital Bank is equipped with Smart Teller Machines (STM) and dedicated video consultation counters, enabling services that are difficult to handle through non-face-to-face channels, such as opening deposit and withdrawal accounts, new and cancellation internet banking, issuing check cards, and issuing security cards and OTPs.

Shinhan Bank, competing with KB Kookmin Bank for the leading bank position, is also actively innovating its branches. Shinhan Bank plans to open its second innovation branch next month at GS The Fresh (SSM) Gwangjin Hayang store. The first innovation branch, Goan Jugong branch (Gangwon Jeongseon), which opened last year inside convenience store GS25, is expected to surpass 1,000 cumulative customers this month and is performing well. Notably, the first innovation branch has a customer transaction ratio from other banks exceeding 56%, about 19 percentage points higher than nearby branches, indicating a significant customer attraction effect, according to the bank.

Shinhan Bank is also attempting innovation at existing branches through ▲Digi-Log Branches ▲Digital Lounges. The Digi-Log Branch incorporates an artificial intelligence (AI) concierge that handles everything from simple transactions to consultations and asset management, bridging digital and analog services. The unmanned Digital Lounge branches are an effort to alleviate customer inconvenience amid the gradual disappearance of branches. Shinhan Bank plans to gradually expand these branch innovations nationwide.

Meanwhile, Woori Bank and Hana Bank have also launched digital finance branches and convenience store branches, respectively. KB Kookmin Bank and Shinhan Bank are even considering opening joint branches in Yeongju, Gyeongbuk, indicating that branch innovation in the banking sector is progressing in various ways.

Bank branches where face-to-face services are conducted are on a declining trend due to the emergence of internet-only banks and the activation of non-face-to-face transactions. According to the Financial Supervisory Service, as of the third quarter of last year, the number of domestic branches of the four major commercial banks was 3,203, a decrease of 203 branches (about 6%) compared to the same period the previous year. Compared to the third quarter of 2016, five years ago, 574 branches (about 15%) have disappeared. Many branches have already been sold or subjected to asset securitization.

Despite this situation, banks are innovating branches to gain an advantage in competition with big tech and internet-only banks that are narrowing the gap. The goal is to find strengths in unique areas such as loan consultations and asset management that cannot yet be fully covered by non-face-to-face channels. A representative from a commercial bank said, "As the offensive from big tech and fintech intensifies, competition in the non-face-to-face area has become important, but it is true that there are still areas that cannot be fully covered non-face-to-face. It is also important for commercial banks to achieve innovation in the areas they can do best."

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