Digital Innovation and High Interest Rate Effects... Savings Banks Growing Significantly Larger

[Image source=Yonhap News]

[Asia Economy Reporter Song Seung-seop] The number of customers using savings banks and the scale of funds are rapidly increasing. This is attributed to growing interest in high-interest savings and deposit products, as well as the successful effects of mobile banking services and application (app) innovations initiated by major savings banks.

According to the industry on the 7th, the number of savings bank users was recorded at 7.69 million at the end of last year, the highest since statistics began. Among them, 4.97 million are depositors using savings and deposit products.

The amount of money entrusted to savings banks is also gradually increasing. Deposits, which shrank to 30 trillion won due to the 2014 insolvency crisis, surpassed 100 trillion won at the end of last year. During the same period, the amount deposited exceeding the depositor protection limit of 50 million won rose from 2.3 trillion won to over 15 trillion won. The amount of money entrusted by one savings bank customer increased from 9.68 million won to 17.09 million won as of the end of June 2020.

The rapid growth of savings banks is attributed to special high-interest savings and deposit promotions. The deposit interest rates of savings banks are nearly 1 percentage point higher than those of commercial banks. As of the 3rd, the regular deposit (non-face-to-face) interest rate announced by Woori Savings Bank is 2.95% per annum. Originally, Cham Savings Bank’s non-face-to-face regular deposit had the highest rate at 2.90%. There are also expectations that a 3.0% deposit interest rate for 12-month maturity products is imminent. Regular deposits at major savings banks have also started to exceed 2.80%.

A savings bank official explained, “Until last year, investors were very interested in aggressively investing in stocks and coins to achieve high profits,” adding, “This year, investors seeking to secure high liquidity while finding safe investment destinations are increasing.” He analyzed, “It is natural that savings bank products offering interest rates approaching 3% per annum are included in investors’ portfolio lists.”

Accessibility and convenience have also improved through digital innovation. In 2018, Welcome Savings Bank launched Welcome Digital Bank (Welbang), and SBI Savings Bank introduced Cider Bank. In 2019, the Korea Federation of Savings Banks launched SB TokTok Plus, making it easier to use products and services from 79 companies.

Recently, with the expansion of open banking services to savings banks, savings bank accounts can now be managed through commercial bank apps as well. Additionally, Welcome Savings Bank is the only one in the industry participating in the MyData (personal credit information management) business, launching various innovative services.

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