[1mm Financial Talk] The Untold Truth Behind Special Savings Promotions... "Even Account Closure Defense Emerges"

On July 12 at 9 a.m., customers are waiting in front of Saemaeul Geumgo in Daerim-dong, Yeongdeungpo-gu, Seoul to open savings accounts.

[Asia Economy Reporter Eunju Lee] Amid rising interest rates, high-interest savings and deposit products are being competitively launched, while the concerns of secondary financial institutions, whose interest rate gap with commercial banks has narrowed, are deepening. To prevent the outflow of “interest rate nomads” who constantly move between banks in search of even slightly higher interest rates, these institutions are struggling to find various strategies to defend against customer attrition. They are considering changing policies to raise the entry barriers for products, making early termination difficult, and focusing on sales strategies centered on deposit products rather than installment savings.

According to the Credit Union on the 30th, starting from the 19th of next month, the Credit Union has strengthened the subscription conditions for special savings and deposit products that can be subscribed to online. It has changed the policy so that special deposits cannot be subscribed to on the same day as the account opening date. From now on, subscribing to online special products at the Credit Union will only be possible after the day following the account opening date. Previously, the Credit Union allowed subscription to special savings and deposit products even on the day the account was opened.

The Credit Union has been recognized among “investment-savvy” customers for its convenient special subscription method. Because it actively offered “online” special products more than other banks, subscribing to special products was relatively easy, and it also operated the “one account per 20 days” regulation policy, which most Korean banks comply with, more flexibly. In the case of the Credit Union, even customers who had opened a new account less than 20 days ago could subscribe to special products on the same day by simply canceling the “deposit and withdrawal function.” As a result, customers nationwide heard about it through word of mouth, created accounts via mobile, and easily subscribed to special products sold in various regions.

This principle will continue to be maintained. However, if customers who have opened a new account less than 20 days ago want to subscribe to online special products at the Credit Union, they must cancel the deposit and withdrawal function of their previous account the day before, making the process somewhat cumbersome. The Credit Union explained that this strengthening of subscription conditions is “for the benefit of local cooperative users.” It means that they considered the situation where online new customers subscribing to special products to receive high interest rates make it difficult for local customers to subscribe to special products.

Saemaeul Geumgo also limits special product sales primarily to local cooperative members. A Saemaeul Geumgo official explained, “Special products are autonomously decided by each individual cooperative,” but added, “Since special products have a strong event-like nature, Saemaeul Geumgo sells special products mainly to local cooperative members.” However, industry insiders interpret this policy as a response to the repeated situation where nationwide customers who subscribed to special products (winning competition against local users) easily move to other cooperatives or banks when new special products appear. It is explained as an effort to prevent customer attrition in advance amid the recent daily emergence of new high-interest special savings and deposit products.

In the savings bank industry, rather than strengthening subscription barriers institutionally, they are focusing on product planning to minimize customer attrition. For example, they are intensively launching products that strengthen regulations to pay contracted interest only if certain conditions are met upon early termination, or when launching special products, they focus on deposit products rather than installment savings. A savings bank official said, “Previously, there were many parking account products that did not impose significant disadvantages upon early termination, but recently, it has been identified that fund movements are rapid, so there is a trend to change product planning,” adding, “When planning deposit products, conditions to make fund outflows difficult are being considered.”