Seoul, South Korea – The number of bank branches in South Korea has continued to shrink, with over 50 branches closing in the past year alone, according to recent data from the Bank of Korea.
As of the third quarter of last year, the total number of domestic bank branches stood at 5,849, marking a decrease of 53 from the previous year. This downward trend has been persistent since 2012, when the number of branches peaked at 7,835. While the pace of closures has slowed somewhat in recent years, the number of branches has consistently declined on a quarterly basis.
The primary driver behind this decline is the growing popularity of digital banking. With more and more customers opting for online and mobile banking services, the need for physical branches has diminished. To improve efficiency and reduce costs, banks have been consolidating their branch networks.
For instance, Woori Bank recently closed 21 branches nationwide, including its flagship branch in Seoul's Jongno district. A representative from a major commercial bank attributed the closures to the increasing reliance on digital channels, stating that 70-80% of deposits and loans are now originated online.
However, the rapid closure of bank branches has raised concerns about potential financial exclusion, particularly among the elderly who may not be as comfortable with digital banking. A study by the Korea Financial Research Institute found that older adults in rural areas are disproportionately affected by the decline in branch accessibility. While residents in major cities like Seoul, Busan, and Daejeon generally have a branch within a kilometer, those in more remote regions like Gangwon, Jeonnam, and Gyeongbuk may have to travel as far as 27 kilometers to reach the nearest branch.
As banks continue to adapt to the evolving digital landscape, it remains to be seen how they will balance the need for cost efficiency with their social responsibility to serve all customers.
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