The Financial Services Commission announced a plan to facilitate the entrustment of banking services to improve consumer access to financial services on March 27. Under the plan, the FSC plans to (a) establish a legislative ground for introducing bank agency services and (b) facilitate the use of jointly shared automated teller machines (ATMs) in the banking sector and the small-sum deposit and withdrawal services at convenience stores.

With digital transformation rapidly taking place in the financial industry, the number of physical bank branches has been continuously declining. This declining trend has been evident not only in Korea but across the globe as it has become inevitable that online (non-face-to-face) work processes have picked up in a digital era. However, this declining trend in the number of bank branches may restrict financial access to digitally vulnerable consumer groups, such as the elderly. Thus, the proposed plan to facilitate the entrustment of banking services is expected to help address this problem and improve consumer access to financial services.

Introducing Bank Agency Services

Under the bank agency framework, third-party entities are authorized to provide intrinsic banking services specified under the Banking Act (deposit-taking, lending, money transfer, etc.). This allows consumers to conduct face-to-face banking businesses on-site at locations that are not bank branches. Bank agencies do not engage in all types of banking functions but instead only perform certain types of services requiring face-to-face interactions with customers on behalf of banks, such as consulting, receiving application forms, signing an agreement, etc. Other types of banking functions, such as the screening and approval of applications which require decision-making but no interaction with customers, are still directly performed by banks.

Since bank agencies will perform intrinsic banking services, there will be entry restrictions, and only authorized entities will be allowed to assume bank agencies. In this regard, banks and corporations that have a bank (or multiple banks) as the largest shareholder will be allowed to assume bank agencies. Those with regional operations, such as Korea Post, mutual finance businesses, and savings banks, will also be allowed to assume bank agencies.

Bank agencies can perform bank agency services on behalf of multiple banks but not for internet-only banks. Since bank agencies are being introduced to increase the on-site access of financial consumers, bank agencies will only be allowed to perform bank agency services face-to-face.

The introduction of bank agency services is expected to help improve consumer access for on-site transactions and increase convenience through comparisons. Even in locations where there are no bank branches, it will be possible for consumers to visit bank agencies to sign up for a checking account or transfer money. Moreover, bank agencies can provide the function of on-site comparison platform as consumers will be able to compare and choose from various savings and loan products at bank agencies.

To introduce bank agency services, the government will seek to revise the Banking Act within this year. However, as it may take a long time to amend the legislation, bank agency services will first be piloted through designation of innovative financial services under the financial regulatory sandbox program (pursuant to the Special Act on Support for Financial Innovation). The pilot operation of bank agency services will be open to financial companies handling deposit-taking and credit lending functions, such as banks, and Korea Post, which operates about 2,500 own branches nationwide (as of end-2024) and has prior experience in performing deposit and withdrawal functions on behalf of banks.

Joint Sharing of ATMs and Deposit/Withdrawal at Convenience Stores

Despite the need to deposit and withdraw cash on a daily basis, certain regions face greater inconvenience due to inadequate availability of ATMs. To help improve consumer convenience in carrying out simple cash transactions, authorities will promote the availability of jointly shared ATMs and facilitate small-sum deposit and withdrawal services at convenience stores.

First, there will be more incentives offered to banks regarding their costs for operating jointly shared ATMs to encourage more participation from banks (currently four banks are offering jointly shared ATMs). In addition, efforts will be made to expand the availability of jointly shared ATMs beyond the currently available locations in local traditional markets to local civil service offices, community centers, and large-scale supermarkets. An expanded partnership will be sought to enable bank customers to have access to the ATMs operated by local financial companies (mutual finance businesses) alongside the jointly shared ATMs.

Currently, certain convenience stores are offering the withdrawal of cash reward points using a plastic card or cash and the deposit of loose coins in small amounts. However, these services have not been in much use thus far due to the inability of withdrawing cash reward points without making a purchase and the lack of mobile card usage. Thus, to help improve consumer convenience in cash transactions at convenience stores, changes will be made to allow consumers to withdraw cash reward points without the condition of having to make a purchase, and the maximum deposit and withdrawal amounts will also be raised in the future. In addition, the use of mobile debit cards—along with actual plastic cards—will be permitted for these services.