The number of brokerage branches and sales offices in South Korea has fallen by nearly 250 over the past five years, even as financial regulators voice concern about reduced access to financial services. Brokerages and regulators are weighing the inconvenience faced by customers left behind by digital shifts against the profitability of maintaining physical outlets.
Korea Investment & Securities will close its Seodaegu sales office starting Oct. 1 and merge its operations into the Daegu Sangin private banking center, according to the financial investment industry on the 23rd. An official at Korea Investment & Securities said the move was part of branch consolidation aimed at improving efficiency in customer management and branch operations.
The case is not limited to one brokerage. Across the financial investment industry, the number of face-to-face outlets is falling quickly. Data from the Korea Financial Investment Association showed that brokerages operating in South Korea had 951 outlets as of Sept. 30, 2021, but that figure dropped 26%, or 247 outlets, to 704 as of June 30 this year. The decline is moving fast at large firms as well as smaller ones. Mirae Asset Securities (006800.KS) cut its outlets to 59 from 78 over the same period, a reduction of 19. Korea Investment & Securities went to 65 from 79, and NH Investment & Securities (005940.KS) to 56 from 76.
Behind the rapid downsizing is the spread of non-face-to-face trading. As trading through mobile trading systems (MTS) and home trading systems (HTS) has grown more active, brokerages have been consolidating their physical branches. Related to this, brokerages have also rolled out a range of promotional events to attract new app customers.
Underlying the shift is a judgment that, apart from specialized outlets serving ultra-high-net-worth clients with 1 billion to 3 billion won (about $720,000 to $2.2 million) or more in financial assets, there is no need to maintain branches while shouldering expensive rents. A private banker at a large brokerage in Seoul said customers in their 60s and older also come into branches to ask how to install the MTS app or how to buy and sell stocks on it. "Rather than being concentrated among younger people, non-face-to-face trading is increasing across a range of age groups," the banker said.
