Faded Bank Shared ATM... Struggling to Find Alternatives to Branch Closures (Comprehensive)

About One Year of Pilot Operation... No Further Expansion

[Image source=Yonhap News]

[Asia Economy Reporter Park Sun-mi] Last year, the expansion of jointly operated ATMs (Automated Teller Machines) piloted by the four major commercial banks?KB Kookmin, Shinhan, Hana, and Woori?has come to a standstill. Amid a rapid decline in the number of bank branches and ATM installations due to the rise of non-face-to-face transactions and decreased cash usage, demand from customers for joint ATMs has also significantly dropped. Commercial banks are considering alternatives to expanding joint ATMs, such as increasing financial convenience stores through partnerships with convenience stores that offer high customer accessibility and operating joint branches among banks to improve branch operation efficiency.

According to the financial sector on the 24th, since the pilot installation of joint ATMs at four nationwide Emart locations (Hanam, Namyangju Jinjeop, Dongtan, and Gwangju Gwangsan) in August last year, no additional installations have been made in just over a year. A major inconvenience of joint ATMs is the limitation on available services, including the inability to conduct passbook transactions (passbook updating, passbook withdrawals). From the customer's perspective, even if they do not use joint ATMs, they can withdraw cash from other banks' ATMs using their bank card as long as they are willing to pay the fees.

An official from a bank explained, "If the pilot phase had shown good results, the expansion of joint ATM installations would have gained momentum. However, large-scale system overhauls such as inter-bank IT integration are required for full-scale expansion, making it difficult. Most customers who do not perform passbook transactions use bank applications for non-face-to-face financial transactions, and the use of cash withdrawals, which was a key function of joint ATMs, is also declining."

As cash usage decreases, the number of ATMs is rapidly declining nationwide.

According to the 'ATM Installation Status by Metropolitan City and Province' obtained by Democratic Party lawmaker Yoon Kwan-seok of the National Assembly's Political Affairs Committee from the Bank of Korea, 1,769 ATMs disappeared nationwide last year. In Seoul alone, 896 ATMs were removed, followed by Busan with 417, Gyeonggi with 179, Incheon with 176, and Daegu with 155.

The decrease in ATMs aligns with the reduction in bank branches. While banks can save on ATM operating costs, which incur an annual deficit of over 3 million KRW per unit, financial accessibility for vulnerable groups in underserved areas has worsened. In fact, the number of ATMs installed per unit area (1㎢) is 34.9 in Seoul, compared to only 0.3 in Gangwon Province, resulting in a regional gap of 116 times.

Banking Sector Actively Seeks Branch Efficiency Strategies

Commercial banks are seeking branch efficiency strategies through expanding financial convenience stores and operating joint branches among banks rather than expanding joint ATMs, which are considered ineffective.

Shinhan Bank is partnering with GS25 to create financial convenience stores in areas with low bank accessibility. The first store is scheduled to open in Jeongseon, Gangwon Province, in October, where customers can perform simple banking tasks via ATMs. Hana Bank is also collaborating with CU convenience stores to open a financial convenience store in Songpa-gu next month, enabling simple deposits, withdrawals, transfers, issuance of passbooks, check cards, and security cards, as well as video consultations with bank staff.

Attempts to share branches among domestic banks are also beginning. In the first half of this year, the number of domestic bank branches recorded 6,326, a decrease of 79 compared to the end of last year. Among the top three banks that reduced branches the most, two?Hana Bank and Korea Development Bank?have started a new initiative to share branches. According to the agreement, the two banks will ▲ allow digitally marginalized groups and Korea Development Bank customers to use Hana Bank's branch network (counters, ATMs) ▲ jointly promote financial products, asset management, and advanced digital services.

Lawmaker Yoon Kwan-seok advised, "Financial authorities should devise efficient ways to utilize ATM resources from an inclusive finance perspective to reduce the gap in cash accessibility between regions." Kwon Yong-seok, a research fellow at Hana Financial Research Institute, stated, "Countries like the UK and Japan operate joint bank branches to respond to these challenges. Domestic banks, which inevitably need to improve branch operation efficiency, should consider protecting financially vulnerable groups through joint branches."