Non-Face-to-Face Finance Is the Trend... "But I Still Prefer Going to the Bank for Large Sums"

KFTC 'Payment Market Insights'
Mobile and Internet Transfer Amounts Increasingly Small
Amounts Over 10 Million KRW Prefer Face-to-Face
"Face-to-Face Channel Competitiveness Must Also Be Strengthened"

[Asia Economy Reporter Song Seung-seop] It has been found that face-to-face channels are still frequently used when dealing with large sums of money. Although the scale of non-face-to-face financial services has approached 100% of the total services, many consumers still feel that branch transactions are safer when the amount is large.

According to the "2022 Q2 Payment Market Insights Based on Statistics" published by the Korea Financial Telecommunications & Clearings Institute on the 17th, the amount transferred via mobile and internet showed a trend toward smaller amounts over time. The average non-face-to-face transfer amount, which was 5 million KRW in 2016, decreased by 920,000 KRW (18.4%) to 4.08 million KRW last year. During the same period, the proportion of non-face-to-face transfers under 1 million KRW increased from 83.5% to 86.2%. The range exceeding 1 million KRW but less than or equal to 10 million KRW decreased from 14.3% to 11.8%.

On the other hand, in the large transfer segment exceeding 10 million KRW, a clear preference for face-to-face methods was observed. The average amount transferred through bank branches increased by 8.09 million KRW (59.7%) from 13.54 million KRW in 2016 to 21.63 million KRW in five years. The proportion of face-to-face transfers exceeding 10 million KRW but less than or equal to 50 million KRW also rose from 10.4% to 12.4%. The 50 million KRW to 100 million KRW range increased from 2.5% to 3.1%, and the 100 million KRW to 1 billion KRW range rose from 2.7% to 4.9%, all showing simultaneous growth.

The Korea Financial Telecommunications & Clearings Institute explained that small-amount transfers rapidly shifted to non-face-to-face channels due to the spread of mobile banking usage. For face-to-face channels, there remains a continuous demand for secure remittances, and for non-face-to-face channels, transfer limits are set, making large transfers difficult.

Face-to-face Demand Still Exists... Competitiveness Must Be Raised Together

The non-face-to-face conversion rate in the fund transfer market recorded 94% last year. This means that the proportion of electronic financial networks (non-face-to-face) accounted for nearly 100% of all transactions conducted through the financial joint network. Since fintech companies emerged in 2016 and simple payment services expanded, non-face-to-face services have sharply increased by an average of 16% annually. Face-to-face transfers decreased by an average of 9% annually, falling below the 10% range.

This is due to the sharp decline in face-to-face channels during the COVID-19 period. The reduction in branches began in earnest in 2012, but from 2020, when COVID-19 was prevalent, until June 2021, 383 branches disappeared.

By industry, the non-face-to-face conversion rate of general banks was the most rapid at 94.3% last year. This level is higher than that of internet-only banks without branches (93.0%). The non-face-to-face conversion rate of regional banks and savings banks was 88.4%. In particular, regional and mutual savings banks accounted for 53.6% of face-to-face financial transactions conducted across all financial sectors.

The Korea Financial Telecommunications & Clearings Institute advised, "There is still demand for face-to-face services such as stable remittance of large funds, professional financial consultation, and smooth financial service use for financially vulnerable groups," adding, "Financial companies need to strengthen non-face-to-face channels while enhancing the competitiveness of face-to-face channels." It also forecasted, "Efficiency and decentralization of banking services, such as accelerating the combination of digital and offline services considering the characteristics of each branch, will continue."

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