7 out of 10 People Who Subscribed to Financial Products Chose 'Online'

Four Major Commercial Banks, Online Share of Financial Products Exceeds 70% on Average
Accelerated Contactless Transactions Due to COVID-19 and Financial Consumer Protection Act Impact

It has been found that 7 out of 10 customers subscribing to financial products such as loans and deposits at major commercial banks used 'online channels.' This is analyzed to be due to the acceleration of non-face-to-face transactions caused by COVID-19 and the implementation of the Financial Consumer Protection Act (FCPA), which led consumers to prefer the easier-to-join online channels.

According to the financial sector on the 3rd, the proportion of online sales of financial products at major commercial banks such as Shinhan, Woori, Hana, and IBK Industrial Bank of Korea exceeded an average of 70% as of the end of April. This is interpreted as the 'digital channel enhancement' strategy that banks have been focusing on for years showing its effectiveness. Non-face-to-face channels such as internet and mobile banking are becoming popular among the middle-aged and older customer base, which is the main clientele of banks.

Hana Bank had the highest online sales proportion for loan products at 88%. Shinhan Bank also showed that 6 out of 10 customers (60.6%) subscribed online instead of offline. IBK Industrial Bank of Korea, whose main customers are small and medium-sized enterprises, had an online subscription rate of 82.2%. Woori Bank is also known to have increased its proportion by about 5 to 8 percentage points compared to the end of last year.

The increased dependence on online channels is the same for deposit products. There was no bank with an online subscription proportion below 50% based on the number of subscriptions. Hana Bank was the highest at 75%, followed by Shinhan Bank (70.6%) and IBK Industrial Bank of Korea (56.9%).

The proportion of online sales of financial products at major banks is increasing even faster this year. The online sales proportion at major commercial banks has risen by an average of 5 to 10 percentage points compared to the end of last year, further widening the gap with offline sales proportions.

The cause is attributed to the spread of non-face-to-face transactions due to COVID-19. As the number of customers visiting branch offices sharply decreased, banks are competing to introduce non-face-to-face exclusive loan and deposit products. The introduction of the FCPA, which complicated face-to-face subscription procedures, also seems to have had an impact. Banks are encouraging online subscriptions due to the workload at counters, and consumers are increasingly perceiving that subscribing at counters is inconvenient.