Gap in financial accessibility by districts widens in Seoul

A sign at the entrance of a bank in Seoul, South Korea, announcing the move to consolidate branches. Yonhap News Agency

The number of bank branches in Seoul has decreased by more than 900 over the past 15 years, further widening the gap in financial accessibility by districts depending on economic size, according to an analysis. The number of potential customers per bank branch in Dobong-gu is eight times higher than in Gangnam-gu, and more than 10 times higher when narrowing down to customers aged 70 and older. Depending on the economic strength of where they live, people have to travel or wait longer to do banking, and the gap is even wider among the elderly.

According to a report released by Kim Sang-bae, a researcher at the Financial Economy Institute, on March 30, Gangnam-gu had the highest number of bank branches in Seoul last year (223), while Dobong-gu and Gangbuk-gu had the lowest (17). As of 2022, Gangnam-gu's local tax revenue amounted to 5 trillion won, nearly 17 times more than that of Dobong-gu and Gangbuk-gu (less than 300 billion won).

Considering the population, the number of branches in Jung-gu is 9.1 per 10,000 people, which is 15 times more than that of Jungnang-gu, Dobong-gu, Gangbuk-gu, and Gwanak-gu, which have 0.6 stores. Kim pointed out that the gap in financial accessibility by region relative to the economic size has widened over the past 15 years, with a sharp decline in the number of bank branches.

The number of bank branches has been steadily declining due to the declining population and the rise of non-face-to-face financial activities, such as online banking. The number of bank branches in Seoul dropped from 2,295 in 2007 to 1,392 in 2023.

As a complementary measure for the shrinking number of branches, banks have opened unmanned branches, convenience store branches, and joint branches. A representative example is 'Digital Express,' a kiosk-centered unmanned branch that Woori Bank additionally opened on April 1. With the opening of the branches in Gangnam Kyobo Tower and Sinsa Subway Station, the number of Digital Express, which Woori Bank has been installing in areas where existing branches were closed or have a large floating population, increased to 12 nationwide.

However, the number of unmanned branches is still in the minority, and they are not an alternative to the growing polarization of financial accessibility. The lack of tellers and digital device-centric operations may be another barrier for the elderly.

According to the report, the number of potential customers per bank branch in Seoul's Jungnang-gu, Dobong-gu, Gangbuk-gu, and Gwanak-gu exceeded 16,000 last year, compared to less than 4,000 in Seocho-gu, Gangnam-gu, Jongno-gu, and Jung-gu. The gap widens even further if it is limited to older people who prefer branches to mobile banking. The number of potential elderly (over 70s) customers per branch in Gangbuk-gu and Dobong-gu exceeded 2,600, while the number in Gangnam-gu, Jongno-gu, and Jung-gu was less than 200, a difference of 13 times.

Researcher Kim analyzed that the reason why the gap in financial accessibility has widened is that banks chose the economic size of locations, rather than their population, in the process of rapidly reducing their branches over the past 15 years. The smaller the economic size and the larger the elderly population, the more the number of branches decreased compared to the population. For example, compared to 2007, the number of potential elderly customers per branch in Gangbuk-gu and Dobong-gu increased more than five times last year, but only tripled in Gangnam-gu, Seocho-gu, and Songpa-gu.

"Even considering the realistic aspect that the number of bank branches is bound to be proportional to assets and capital, we cannot ignore the characteristics of public goods of bank branches," Kim said. "Banks should consider the gap in financial accessibility by region, not just the size of assets and capital when managing their branches."

※This article has undergone review by a professional translator after being translated by an AI translation tool.