More than 80% of banking transactions in Korea now online: BOK

[Photo by Yonhap]

More than 80 percent of deposit and withdrawal transactions in South Korean banks are conducted online, data showed Thursday.

According to the Bank of Korea, internet banking transactions accounted for a record 83.2 percent of the entire transactions in the first quarter of this year, which is 3.4 percentage points higher than the same period last year.

Internet banking refers to a wide range of transactions through mobile applications or bank websites, including transfers, fund transfers, and loan applications.

Since its first compilation in the first quarter of 2005, where it accounted for 16.5 percent of the entire transactions, the usage of internet banking has steadily climbed.

Online transactions surpassed 50 percent in the third quarter of 2018, 60 percent in the fourth quarter of 2019, 70 percent in the first quarter of 2021, and reached 80 percent in the second quarter of last year.

With the rise of internet banking transactions, traditional face-to-face transactions at bank branches and the use of automated teller machines have declined sharply.

Face-to-face transactions, which accounted for 26.9 percent in the first quarter of 2005, dropped annually to a record low of 4.1 percent in the first quarter of this year, even lower than the 5-6 percent during the Covid-19 pandemic.

Similarly, transactions through automated machines decreased from 45.1 percent in the first quarter of 2005 to below 20 percent in the first quarter of 2021, hitting a new low of 11.0 percent this year.

In terms of simple account inquiries, internet banking dominated with 93.5 percent in the first quarter of this year, while face-to-face checks dwindled to just 5.2 percent.

During the pandemic, internet banking peaked at 94.6 percent in the fourth quarter of 2021, maintaining similar levels since then. In contrast, face-to-face transactions decreased to 3.9 percent in the fourth quarter of 2021, with a slight rebound in the first quarter of the following year.

This shift in banking behavior is prompting banks to reconsider their branch strategies.

The total number of bank branches nationwide decreased by 13 to 3,905 at the end of the fourth quarter of last year compared to the previous year, and by a significant 1,761 branches compared to the fourth quarter of 2013.

The number of automated machines has also seen a substantial decline, decreasing to 20,308 by the end of the fourth quarter of last year from 31,128 a decade ago.

“In-person visits to branches by customers are declining annually, and we are enhancing mobile banking services to improve customer convenience,” said an official from a commercial bank.