Asia: South Korean banks downsize workforce

Banks in South Korea have been downsizing staff, embarking on the digital transformation of services through automation and online services. Shinhan Bank, a leading Korean bank, has offered voluntary retirement since 2017 and has been able to shed nearly 300 jobs since the announcement of the program. The bank is planning to further downsize its staff by maintaining the voluntary retirement program and offering severance pay between 8 to 36 months’ salary based on length of service.

Other big banks such as KB Kookmin Bank, KEB Hana bank and NH Nonghyup Bank have taken similar steps by introducing their own voluntary retirement programs. Banks in the country have been facing difficulty in operating branches due to increasing operating costs as well as tighter competition from internet-only banks, which offer online banking products and services as well as higher interest rates offered on savings.

According to RFi Group data, there has been growing acceptance of Internet-only banks. Around 4 in 10 banked customers in South Korea would consider switching their main bank to an Internet-only bank. The rising popularity of digital products and services will likely result in a greater proportion of banked consumers feeling comfortable performing more complex tasks online rather than in the branch.

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