Why Can I Sign Up for Individual IRP on Mobile but Not Cancel It?

No Mobile Cancellation Service at 2 of the 4 Major Commercial Banks

[Asia Economy Reporter Park Sun-mi] Although banks have made it easy to sign up for Individual Retirement Pension (IRP) accounts through mobile banking, they are not operating account termination services, causing consumer dissatisfaction. Even if consumers signed up for IRP using their smartphones, they must use internet banking or visit a bank branch in person to terminate their accounts.

According to the banking sector on the 17th, among the four major commercial banks, Shinhan Bank and Woori Bank do not offer mobile IRP account termination services. Even though non-face-to-face IRP sign-up is immediately possible via Shinhan’s ‘SOL’ and Woori’s ‘Woori WON Banking’ apps, account termination is not available. Customers must visit a bank branch in person or, if they want to terminate non-face-to-face, they can only do so through internet banking on a PC, not via mobile. On the other hand, KB Kookmin Bank and Hana Bank operate both IRP sign-up and termination services on their proprietary applications, ‘KB Star Banking’ and ‘Hana One Q,’ respectively.

Shinhan Bank and Woori Bank have stated that they are preparing to enable termination services within their apps as soon as possible. Shinhan Bank aims for January next year, and Woori Bank targets March next year.

Among consumers, there is dissatisfaction that while detailed information such as account balance, payment amount, and tax details can already be checked non-face-to-face via internet banking, the inability to terminate accounts solely through mobile is seen as a trick to retain customers through ‘inconvenient termination.’

In fact, the individual IRP market is rapidly growing as financial consumers’ interest in retirement preparation increases, intensifying competition to secure customers. According to statistics from the Financial Supervisory Service, as of the end of September, the total IRP reserves across the financial sector amounted to 42.9 trillion KRW, a 24.7% increase compared to 34.4 trillion KRW at the end of last year. As of the end of the third quarter, the ranking of IRP reserves in the banking sector is ▲Kookmin 7.7358 trillion KRW ▲Shinhan 7.1501 trillion KRW ▲Hana 5.2655 trillion KRW ▲Woori 3.925 trillion KRW. All have seen more than a 30% increase in reserves compared to a year ago.

Especially since IRP is a ‘tax-saving’ product that can receive up to a 16.5% tax credit within an annual limit of 7 million KRW (including tax-qualified pension savings), the competition to attract IRP customers intensifies toward the end of the year. Currently, banks are waiving fees for customers who sign up for IRP non-face-to-face or offering various prizes through lotteries.

Some express concerns that while enabling both IRP sign-up and termination through mobile banking would increase customer accessibility to financial products, it could also lead to side effects from hasty sign-ups and terminations. A bank official said, “Many customers who applied for IRP termination via internet banking come to the branch to complain because the actual amount received differs from the expected amount,” adding, “If mobile termination services become widespread, such incidents may become more frequent in the future.”