[1mm Financial Talk] Why Banks Are Increasing Foreigners-Only Products and Branches

Fierce Competition Among Banks to Attract Foreign Customers
Exclusive Savings and Credit Loans for Foreigners... More Branches Opening
Long-term Foreign Residents Up 26% in Five Years
"Trend Toward a Multicultural Society... Need to Secure Core Customers"

Competition among banks to attract foreign customers is intensifying. Banks are moving beyond services limited to account opening and remittances, and have started developing exclusive credit loans and savings products. Unlike the nationwide trend of branch closures, foreigner-specialized branches are expanding significantly. This is analyzed as a sign that efforts to secure foreign residents in Korea as customers are becoming more active as their numbers increase.

According to the financial sector on the 15th, competition among banks to secure foreign customers has become fiercer than before, with preparations of exclusive products, branch expansions, and operation of consultation centers even on weekends.

Shinhan Bank will open a foreigner-specialized branch in Doksan-dong, Geumcheon-gu, Seoul next month. Following the opening of its first foreigner-specialized branch in Gimhae, Gyeongnam in January this year, it is accelerating branch expansion by establishing two new branches in the first half of the year alone. Shinhan Bank is also considering opening branches in Ansan, Suwon, and Bucheon, where the proportion of foreign residents is high in the metropolitan area. Hana Bank plans to open a foreigner-exclusive Culture Bank (a complex cultural facility equipped with bank counters and free clinics) in Namdong Industrial Complex, Incheon within this year.

Financial services are also expanding from salary account openings and remittances to asset management areas. Hana Bank is reviewing the launch of a savings product available through its foreigner-exclusive application (app) called 'HanaEZ.' It is also preparing a foreigner-exclusive credit loan product. Shinhan Bank aims to release a credit loan product in the third quarter. Until now, foreigners could only get loans secured by collateral such as housing, and credit loans were virtually unavailable. Banks are also reportedly considering expanding loans by signing agreements with companies employing many foreigners or using severance pay as collateral.

The reason banks are rushing to increase foreigner-related services is that the number of foreign residents in Korea is growing, and they are recognized as a major customer group. According to immigration statistics from the Ministry of Justice, the number of foreigners residing in Korea last year was 2,650,783. Among them, 2,042,017 were long-term residents staying for more than 91 days. The number of long-term residents increased by 26% over five years from about 1.61 million in 2020.

The diversification of financial transactions as the number of long-term foreign residents grows is also cited as a reason why banks are actively increasing related products. A representative from a commercial bank said, "Sometimes we meet foreigners who have lived and worked in Korea for more than 20 years," adding, "They actually have the same financial transaction needs as Koreans." Another commercial bank official said, "When the foreign population exceeds 5% of the total population, it is considered a multicultural society, and statistically, Korea has already entered this stage in earnest," adding, "As financial transactions by foreigners increase, it has become impossible to delay preparing financial services targeting them."

Unlike the widespread use of mobile transactions, foreigners still frequently use branches, which is one reason for increasing the number of branches. A banking official said, "Most branch users are either elderly or foreigners," adding, "Although the total number of branches is decreasing, foreigner-specialized branches will continue to increase."

This content was produced with the assistance of AI translation services.