Post offices to handle commercial bank services

(Yonhap)

Post offices in South Korea are expected to be able to offer deposit and savings-related services that are typically handled by commercial banks.

According to financial authority sources on Tuesday, the Financial Services Commission (FSC) plans to introduce a bill to amend the Banking Act within 2024 to establish a bank agency system, with a related announcement expected soon.

Under the current Banking Act, non-bank entities are not authorized to accept deposits, issue securities or debt certificates, lend money, or handle foreign exchange.

While FSC Chairman Kim Byoung-hwan recently pointed out that rapid digitalization and efficiency-focused efforts by financial companies have worsened financial access for the elderly, banks have no choice but to cut branches to reduce costs.

The bank agency system is being proposed as a solution to this reality.

Japan introduced a similar system in 2002 to expand low-cost offline channels in areas affected by branch reductions.

The authorities plan to operate these agencies under a license system because they represent the business of banks.

However, institutions such as post offices, which already handle deposit and savings services, would only need to register to offer these additional services.

Authorities are also considering not applying a “single-bank exclusivity rule,” allowing agencies to handle services from multiple banks.

This would be similar to general insurance agencies (GAs) that deal with products from various insurance companies.

The financial authorities will examine the potential risks associated with permitting non-banks to handle banking operations during the course of drafting the new bill.