Thousands of Bank Jobs Lost to Digitalization

Banking is no longer a solid lifetime job as automation and online banking make workers redundant in offline branches to the tune of 5,000 lost positions this year.

While the average annual salary in the sector is W100 million, way above most other professions, that is mostly due to investment bankers rather than commercial banks' rank and file, whose jobs are increasingly precarious (US$1=W1,191).

Around 1,000 bank branches have closed down over the last five years, and the number of workers declined 10 percent. Instead banks are hiring IT experts to handle their digital operations.

"It costs around W2 billion a year to run a branch in Gangnam, including wages for 20 workers and W500 million in rent," one bank executive said. "Our competitiveness will weaken compared to online-only banks if we continue to operate that way."

Some 4,888 workers were made redundant by Citibank, KB Kookmin, KEB Hana, NH Nonghyup, Shinhan, Standard Chartered and Woori banks this year on early retirement packages. Woori is taking more early retirement applications starting Monday, so by the end of the year over 5,000 bank jobs will have been lost.

KB Kookmin accepted early retirement applications from 800 workers in January, and Shinhan let go 220 in January and another 130 in July. Citibank, which is shutting down its retail banking operations here, has had early retirement applications from 2,300 workers and accepted 1,980 of them.

Bank staff who take early retirement are getting younger. KEB Hana, NH Nonghyup, Woori banks decided to accept applications from workers in their early 40s.

"The coronavirus pandemic sped up the shift to online banking," a bank executive said. "We can no longer stick to the traditional mode of service based on branch offices and face-to-face services."

Banks are adapting by closing down branches and cutting costs. The number of branches has been declining since a peak of 7,835 in 2012.

This June only 6,462 were left. Instead, commercial banks boost their online services. Shinhan is the leader in the process and set up digital desks or kiosks last year for online consultation on various products and loans. It now has 84 digital desks in 73 branches nationwide.

KB Kookmin and Woori each opened their own digital consultation services earlier this month, while other lenders are preparing similar services. Such changes are being criticized for alienating elderly people, who tend to be less digitally savvy than younger people, but banks say branches will keep closing.