[The Counterattack of Regional Banks] ① Daegu Bank in the Heart of Seongnam?... Regional Banks Targeting the Seoul Metropolitan Area

[Report] Visiting DGB Daegu Bank Seongnam Financial Center
Expanding Metropolitan Area Operations Amid Local Economic Downturn
Metropolitan Branch Share 3.2% in 2018 → 4.5% in 2022

[Asia Economy Reporter Kwon Hyun-ji] “When we contact companies first and ask if they need loans, they are all surprised, saying ‘We didn’t know regional banks were working so hard in the Seoul metropolitan area.’”

This is what Cha Chan-ho, branch manager in charge of corporate loan sales at DGB Daegu Bank Seongnam Financial Center, said. Having worked in Daegu, Cha moved to the Seongnam Financial Center this January and is directly visiting corporate-dense areas such as Gangnam in Seoul and Pangyo in Seongnam or calling companies to attract customers.

Regional banks are attempting a “counterattack” in the Seoul metropolitan area. As the regional economy loses vitality due to economic recession and population decline, regional banks’ plan is to find a breakthrough for growth in the metropolitan area. In particular, regional banks are focusing on the niche corporate loan market that large commercial banks have overlooked.

Corporate finance counter inside DGB Daegu Bank Seongnam Financial Center, Seongnam-si, Gyeonggi Province. / Photo by Kwon Hyunji

On the 9th, the DGB Daegu Bank Seongnam Financial Center in Seongnam, Gyeonggi Province, which we visited, had a space that demonstrated this sales strategy of regional banks. Unlike other branches lined with counters for individual customers, this bank branch had corporate customer consultation counters occupying half of the space.

The corporate customer consultation counters were composed of individual meeting rooms. Each meeting room was furnished with sofas and tables, making confidential consultations possible. This indicates the effort put into corporate loans. About 80% of the customers visiting this branch daily are corporate clients, significantly higher than individual customers.

As a latecomer entering the metropolitan loan market dominated by commercial banks, there are many difficulties. A representative issue is the psychological distance customers feel toward regional banks. Some customers hesitate to transact because they find it unfamiliar that a regional bank operates in the metropolitan area.

Branch manager Cha expressed, “Even when offering better interest rates and loan limits than commercial banks, it is frustrating to lose customers.” Therefore, they are targeting niche markets in the metropolitan area, where corporate banks and commercial banks have branches, through “visiting financial services” that involve directly visiting companies for loan sales.

Opened in January this year, DGB Daegu Bank Seongnam Financial Center in Seongnam-si, Gyeonggi Province / Photo by Kwon Hyunji

DGB Daegu Bank operates a total of nine branches in the metropolitan area, including the Seongnam Financial Center. As major manufacturing industries such as textiles, automobiles, and machinery, which once drove regional economic growth, declined and customers were lost, they chose to expand into the metropolitan area.

In fact, the proportion of DGB Daegu Bank’s metropolitan branches has steadily increased from 3.2% in 2018 to 4.5% in 2022. While reducing regional offline branches by 5 to 20 each year in line with digital transformation, the number of metropolitan branches is either increasing or being maintained.

DGB Daegu Bank plans to improve sales efficiency by reallocating personnel concentrated in regional retail branches to corporate sales staff in the metropolitan and Bu-Ul-Gyeong (Busan, Ulsan, Gyeongnam) areas. Branch manager Cha emphasized, “The expansion of regional banks into the metropolitan area is a way for regional banks to develop further while sufficiently serving as a regional financial lifeline.”