[1mm Financial Talk] Local Bank Apps Led by Golmokdaejang... 'Not So Sure' in the Capital Area

Regional banks are undertaking digital transformation to survive, but awareness of mobile banking applications remains low outside their key regional bases. This is why it is expected that the transition of regional banks, the leaders in their neighborhoods, to commercial banks and their expansion into the metropolitan area will not be easy.

According to the financial sector on the 14th, Consumer Insight conducted a financial platform planning survey in July targeting 2,630 adults aged 20 to 69 nationwide. The nationwide installation awareness rate (customers aware of app installation) of regional banks' mobile banking apps remained in the single digits.

Daegu Bank, which recently declared its transition to a commercial bank and is preparing related procedures, had the highest installation awareness rate among regional banks but only recorded 5.0%. Busan Bank (3.8%), Kyongnam Bank (2.5%), Gwangju Bank (2.1%), and Jeonbuk Bank (2.0%) all fell short of Daegu Bank's level.

Installation awareness rates were even lower in the metropolitan area and Chungcheong region outside the key bases. For Daegu Bank, the rates were 1.2% in Seoul, 0.3% in Gyeonggi, 3.5% in Incheon, and 1.7% in Daejeon, Chungcheong, and Sejong, all below the national average. This contrasts sharply with the installation awareness rate of nearly 41.9% in the key regions of Daegu and Gyeongbuk. Other regional banks showed similar patterns.

Regional banks have expanded their operations outside their key regions over the past few years as non-face-to-face financial services have become more active. As a result, as of the end of last year, the proportion of won-denominated loans in the metropolitan area (Seoul, Incheon, Gyeonggi) among the three major regional financial holding companies (BNK, JB, DGB) was 14.6%, an increase of 4.7 percentage points compared to five years ago.

However, increasing awareness outside their key regions remains a deep concern for regional banks. A representative from a regional bank said, "At one point, the management considered purchasing major landmark buildings in Seoul to enhance promotional effects," adding, "That shows how challenging it is to raise awareness in the metropolitan area."

Regional banks are also focusing on strengthening their digital banking apps. Daegu Bank, preparing for its transition to a commercial bank, is concretizing a quasi-internet specialized bank model using its digital financial channel 'iM Bank' along with rebranding its name. Other banks are also breaking new ground through collaborations with fintech companies.

A representative from a commercial bank said, "Regional banks are putting effort into digital channels to transition to commercial banks and enter the metropolitan area, but it will not be easy to compete with internet banks backed by massive IT platforms or the rapidly improving digital channels of existing banks," adding, "Ultimately, offering competitive products and interest rate conditions compared to existing banks is key."

Consumer Insight also stated, "Customers using mobile apps of regional banks, including Daegu Bank, tend to be concentrated at local branches, not only offline," and emphasized, "It is necessary to expand the customer pool currently concentrated at branches and secure customers who regularly and necessarily use mobile apps."

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