South Korean banks are facing increasing challenges as digitalization leads to a decline in the number of people visiting offline branches.

According to sources from the financial sector on Sunday, the average monthly number of visitors to the country’s five major commercial banks - KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup - fell below 8 million in the first four months of this year.

This is the first time the figure has dropped below 8 million since the banks began compiling relevant statistics.

The primary reason for the decline in in-person banking is digitalization, while the drop in cash usage has also played a significant role.

According to a recent survey by the Bank of Korea of over 3,500 adults aged 19 and older across the country, cash accounted for just 15.9 percent of all payment methods last year - lower than both credit cards (46.2 percent) and debit cards (16.4 percent).

Although customers are visiting banks less frequently, it is not easy for banks to close their branches due to the financial authorities’ policy of not adding to the inconvenience of the elderly and other financially marginalized groups.

No closures have been scheduled among the five major banks this year, apart from NH Nonghyup Bank’s plan to close one branch office in July.

Banks said that the real burden is not having branches themselves, but the need to staff them with personnel.

As a solution, they are exploring alternatives such as consolidated branch operations through post offices or enabling convenience stores and large retailers to perform basic banking functions.

The Financial Services Commission plans to launch a pilot program in July, designating bank agency services as an innovative financial service.

Some banks are also considering expanding unmanned branches powered by artificial intelligence (AI).

Shinhan Bank currently operates 77 digital lounges, its unmanned branch model, and plans to expand the network.

Mobile branches that bring banking services directly to customers are another option.

Hana Bank plans to deploy mobile branches to serve financially vulnerable populations such as the elderly, foreigners, and small business owners.

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