[New Korean Dream⑤] 'Foreigners Approaching Daegu's Population'... Commercial Banks Expanding Beyond Remittances to Specialized Products and Services

On the 22nd, a foreign worker attending the 'KEB Financial Festival' held at the Multicultural Park in Wongok-dong, Ansan-si, Gyeonggi-do, is receiving financial consultation services in their native language from an employee of the partner bank of Korea Exchange Bank.

[Asia Economy Reporter Yu Je-hoon] "Before the COVID-19 pandemic, the number of foreigners residing in Korea once approached 2.5 million. The current figure of 2 million is actually a decrease. Recently, beyond remittances, there has been growing financial demand among long-term foreign residents for funds related to jeonse and monthly rent deposits, as well as home purchases. This is why commercial banks are actively developing various products and services." (Commercial bank foreign exchange business official)

As the era of 2 million foreigners residing in Korea arrives, commercial banks are busy developing various financial products and services. Remittance services for foreigners who entered under the existing Employment Permit System are being enhanced, and at the same time, deposit, loan, and other financial products and related services for foreigners with increasing financial needs are also expanding.

According to the Ministry of Justice’s Immigration and Foreigners Policy Headquarters, as of May, the number of foreigners residing in Korea was counted at 2,012,862, an increase of 1.3% compared to the previous year. Foreigners, who had once dropped below 2 million due to the COVID-19 pandemic, are now "returning" as the situation becomes endemic. 'New Korean Dream'

The population size of 2 million is not negligible even for commercial banks. In terms of population, it ranks fifth after Seoul, Busan, Incheon, and Daegu among special and metropolitan cities, and it is comparable to the number of main transaction accounts in commercial banks, which range between 2 to 3 million. A financial industry official stated, "Typically, commercial banks have 2 to 3 million main transaction accounts. Of course, income levels differ and a significant amount is remitted overseas, but this group essentially represents a customer base comparable to that of a medium-sized commercial bank."

◆Evolving Remittance Services... Dedicated Apps Included

Accordingly, commercial banks are actively developing financial products and services targeting foreigners. Remittance is one of the most actively used financial services by foreigners residing in Korea. Among the approximately 1 million registered foreigners, a significant portion consists of non-professional employment (about 210,000) and visit employment (about 110,000), so many remit income earned in Korea to family and relatives in their home countries.

According to the '2021 Immigrant Residence Status and Employment Survey' released by Statistics Korea last year, 35.4% of foreigners in Korea remit money to family or relatives living outside Korea, and among them, 22.2% remit overseas 12 times or more annually. This means that about 10 million foreigner overseas remittance transactions occur annually.

Commercial banks are competitively offering remittance services. KB Kookmin Bank operates the 'KB One Asia Overseas Remittance Service,' which allows dollar remittances to over 20 Asian countries with a fee of 1,000 KRW regardless of the amount. Woori Bank offers various remittance services such as ▲Direct Overseas Remittance ▲Woori Global Quick Remittance ▲Woori UnionPay Quick Remittance.

Dedicated applications have also emerged. Hana Bank operates the overseas remittance dedicated deposit account Easy One as well as the 'Hana EZ' app, a dedicated overseas remittance app for foreigners. This app enhances convenience by offering estimated processing times, real-time status checks, and open banking services.

◆Evolving into Dedicated Financial Products and Services

Commercial banks are launching deposit and loan products for foreigners residing in Korea, not just remittance services. While most general deposit and loan products are available to foreigners on the same terms as Koreans, the aim is to attract customers with products tailored to the living conditions of foreigners in Korea.

Shinhan Bank operates foreigner-exclusive products such as the 'Shinhan The Dream Installment Savings' and 'The Dream Jeonse Loan.' The The Dream Installment Savings is a 12-month maturity product that enhances convenience by introducing an automatic transfer service, considering that customers may find it difficult to visit branches at maturity. The Dream Jeonse Loan is a product that hedges credit risk with guarantee insurance and rental contract risks with rights insurance.

KB Kookmin Bank also offers the 'KB Welcome Plus Jeonse Deposit Loan,' a product similar to Shinhan Bank’s The Dream Jeonse Loan, providing new tenant funds up to 200 million KRW (within 80% of the rental deposit).

Recently, internet-only banks have also shown interest in the foreigner-exclusive financial product market. Toss Bank launched the first non-face-to-face banking service among internet banks last month. Unlike commercial banks that generally require branch visits to open accounts, foreigners can sign up non-face-to-face just like Koreans. Products such as demand deposit accounts, which have recently gained popularity with interest rates in the 2% range (0.1% for amounts exceeding 100 million KRW), are also available to foreigners as they are to Koreans.

◆Specialized Branches and Services Evolving... Regulatory Barriers Remain a Concern

Efforts to enhance convenience for foreign customers continue. Specialized branches have been established in areas with high concentrations of foreigners, such as Daerim-dong in Guro-gu, Seoul, and Wongok-dong in Ansan, Gyeonggi Province.

Woori Bank has set up the foreigner-exclusive 'Ansan Foreign Financial Center' in Ansan and designated Sundays as foreigner-specialized service days at branches in Gimhae, Uijeongbu, Gwanghui-dong, Bal-an Financial Center, and Gwangjeok Branch. Foreign staff from China, Indonesia, Thailand, and other countries work at these branches to provide consultations in native languages. KB Kookmin Bank and Shinhan Bank also operate foreigner-specialized foreign exchange remittance centers in Wongok-dong, Ansan, and Hana Bank runs 16 Sunday branches mainly in areas with many registered foreigners or foreign foot traffic.

Non-face-to-face services are also being implemented. Shinhan Bank’s SOL Global is a foreigner-exclusive non-face-to-face platform offering services in 16 languages, allowing foreigners residing in Korea to register without visiting a branch. It also supports inquiries, transfers, overseas remittances, and bill payments. Woori Bank’s foreigner-exclusive app 'Woori Global Banking' is available in 10 languages.

However, within the financial sector, as banks rapidly reduce branch networks, there are calls for easing non-face-to-face regulations for foreigners to improve their convenience. A commercial bank official said, "As branches shrink, the demand for non-face-to-face financial transactions has greatly increased, but there is no non-face-to-face identity verification service for foreigners, which restricts their financial transactions. If such a system is established, it will be possible to open various product accounts non-face-to-face."