[Current State of K-Finance for Foreign Nationals]①From Niche to Core... Banks Go All-In on First-Mover Competition

Era of Over 2 Million Long-term Foreign Residents

Frequent Transactions and High Loyalty... Emerging as Core Customer Segment

From Specialized Branches to Credit Loans and Wealth Management

Foreign Customer Services Evolve... Regional

Editor's NoteThe number of foreign nationals residing long-term in Korea has surpassed 2 million, intensifying competition among banks to attract them as core customers. Whereas banks previously regarded this as a niche market, declining population and the youth's departure from major commercial banks have now made foreigners, alongside seniors, a key customer segment in the banking sector. In this changing environment, we will take a three-part look at how banks are restructuring their business strategies, whether anything is being overlooked in the process, and the current state and challenges of the financial market for foreigners.

"Once foreign customers start banking with us, they tend to maintain long-term relationships and even refer their acquaintances, demonstrating strong loyalty. The number of long-term foreign residents has increased, especially among unskilled workers and international students, resulting in a high proportion of newcomers to society. With young people turning away from major commercial banks, this presents a good opportunity to attract more of them. From our perspective, there is no reason not to expand our foreign customer base."

An executive at a major commercial bank explained that this is why the banking sector has begun to recognize foreign customers as a core demographic. With securing a solid customer base emerging as the biggest challenge, especially for commercial banks, foreign customers are seen as the ideal target.

Foreigners Become a Core Customer Base... Why Banks Are Paying Attention

According to the Ministry of Justice on May 21, the number of foreigners residing in Korea as of the end of March this year stood at 2,833,333, a 4.1% increase from one year ago (approximately 2.72 million). Of these, 2,166,955 were long-term residents who stayed in Korea for more than 90 days. This group alone grew by over 100,000, with a 5.2% increase—outpacing the overall growth rate.

The types of residency have also diversified. While overseas Koreans (560,000) and unskilled workers (350,000) still make up the largest shares, there has been a noticeable increase in foreign skilled workers (E7 visa holders) who have the option for long-term employment and residency. As of the end of March this year, there were 83,284 foreigners with E7 status, a significant 21.9% increase year-on-year. This indicates that the number of foreigners who can provide banks with a stable, long-term source of revenue is growing.

In addition to the increase and diversification in residency status, the banking sector is paying attention to the unique financial transaction patterns of foreigners. Because they have a home country, foreign customers frequently require overseas remittance and currency exchange services, resulting in more active financial transactions than locals. They also tend to maintain long-term relationships with the bank where they first open an account, and once trust is established, it is relatively easy to recommend and sell additional financial products to them.

Changes in remittance patterns have also been observed before and after COVID-19. Whereas previously, large sums were often sent at once, the rise of mobile banking in the post-COVID era has led to more frequent, smaller remittances. For banks, an increase in transaction volume translates to higher fee income. A banking industry insider noted, "There has also been a noticeable rise in Chinese and Vietnamese foreign workers inquiring about investing in domestic stocks."

Banks Reshape Their Business Strategies, Services Evolve

Competition to attract new customers among banks is becoming increasingly fierce. As of April this year, the five major banks in Korea (KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup) had 6,993,367 foreign customers, a 14.7% increase (about 900,000) from 2022 (about 6.09 million). When including Jeonbuk Bank, which has aggressively expanded its foreign customer base in recent years, the total rises to 7,173,367, already surpassing 7 million.

Against this backdrop, banks are not only reorganizing their product lineups beyond simple remittance and transfer services, but are also expanding into non-financial services, reconfiguring their overall business approach.

Offline channels are also increasing. There are currently 36 specialized branches for foreign workers among the five major banks in Korea, with Hana Bank operating the most at 17 locations. As of the end of last month, the total number of such branches across all banks had expanded to 43. The number of branches open on Sundays continues to grow. Shinhan Bank, for example, plans to convert four branches (in Busan, Daegu, Incheon, and Gwangju) into Sunday service branches in the first half of this year alone.

Offline channels are also diversifying. In January, Woori Bank opened a private banking (PB) branch in Jeju Island targeting high-net-worth foreign clients. This is a strategic move to attract wealthy foreigners who have come to Jeju for investment immigration. The branch strategically staffs Chinese-speaking employees or those with Chinese nationality. A Woori Bank representative stated, "We have received a lot of feedback that clients appreciate the availability of specialized Chinese-language consultations and the differentiated space that respects their privacy."

Services targeting foreigners are also expanding. As long-term residents increasingly seek to accumulate assets in Korea, banks have launched dedicated savings products for them. KB Kookmin Bank also plans to launch a savings product exclusively for foreigners in the first half of this year. NH Nonghyup Bank has established the 'NH Global With Desk' system for foreign customer consultations and, in October last year, introduced AI-powered real-time interpretation and translation solutions supporting 38 languages in Ansan, Hwaseong (Gyeonggi Province), and Incheon.

The range of products has also expanded to credit loans. The goal is to support foreigners with the initial large sums required for entry and settlement in Korea, and to secure them as deposit customers. Shinhan Bank and Jeonbuk Bank are the most aggressive, offering loan limits up to 50 million won, while Nonghyup Bank has expanded its limit to 30 million won. In addition, Woori Bank opened the Woori Global Lounge in Michuhol District, Incheon in November last year, providing a dedicated rest and cultural space for foreigners, and runs Korean language classes on Sundays—demonstrating how banks are expanding their services into non-financial areas.

"No Bank Has Stayed Out" ... Even Regional Banks Join In

Recently, regional banks have also joined the competition to attract foreign customers. A banking industry source said, "Many unskilled workers enter Korea as seasonal employees for small businesses in the regions or in agriculture and fisheries. With the non-metropolitan population declining sharply, foreigners are the only group whose numbers are rising."

Jeonbuk Bank has been the most aggressive in attracting foreign customers. The number of foreign customers at Jeonbuk Bank grew from 66,000 in 2022 to 180,000 as of April this year. This increase is attributed to an expanded demand for credit loans, which in turn has increased the number of deposit customers. Busan Bank also saw a 34.2% rise in the number of active foreign customers at the end of last year compared to 2023. During the same period, the number of foreigners residing in the Busan area increased by 24.11%, from 49,090 to 60,929, indicating a significant expansion in customer numbers.

Financial services and offline channels are also expanding. Since 2024, Busan Bank has operated a foreign supporters program to assist with communication for foreign customers, currently deploying 15 supporters across 14 branches and providing interpretation in 9 languages. Gyeongnam Bank utilizes three foreign employees with over ten years of experience as supporters to provide communication assistance. Gwangju Bank plans to open a new Foreign Financial Center in Seoul in the first half of the year, further expanding its offline presence.

A commercial bank official remarked, "In the past, few banks were interested in foreign customers, but nowadays it's no exaggeration to say that every bank is getting involved."

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