There are suggestions in the National Assembly to expand the bank agency system that entrusts banking duties to convenience stores and large marts. The government plans to pilot a solution to allow banking tasks to be performed at post offices and other locations in the second half of the year in response to banks continuing to close branches.
According to the National Assembly and the financial sector on the 11th, Jeong Myung-ho, the senior expert of the National Assembly's Strategy and Finance Committee, noted in a review report concerning the introduction of bank agency services that "expanding the eligible businesses for (bank agency services) to non-financial companies like convenience stores and large marts can provide various link services that combine financial and non-financial services, thereby enhancing consumer benefits," and added that "Japan has allowed non-financial companies to engage in financial agency services since 2005 to promote bank agency services."
In Japan, banking services such as cash withdrawals, tax payments, and loan repayments can be accessed at convenience stores like Seven-Eleven.
Jeong, the senior expert, stated regarding the plan to expand bank agency services to convenience stores and large marts that "there are positive aspects in terms of revitalizing bank agency services." Currently, an amendment to the Banking Act introducing bank agency services is pending in the National Assembly.
The discussions on the introduction of bank agency services are gaining momentum because banks are continuously reducing their branches every year. According to the Financial Supervisory Service and the Bank of Korea, the total number of domestic bank branches as of the end of last year was 5,792. The number of bank branches peaked at 7,836 in 2012 and has decreased each year, with a total of 2,044 branches closing by last year. As online non-face-to-face transactions surpassed 90% of overall banking transactions, banks are reducing their offline branches. In particular, the closure of branches in rural areas is severe.
In response, the Financial Services Commission has designated bank agency services as an innovative financial service, starting pilot operations in July. The pilot will begin at post offices, which have 2,500 sales points nationwide. From July, post offices will handle not only contract signing and termination related to savings and loans and foreign exchange transactions but also consultations regarding associated products. However, loan screening and approval will remain limited to banks as before. The expansion of bank agency services to convenience stores and marts is also expected to be discussed during the formal implementation phase following the pilot project.
The report pointed out, however, that non-financial entities may lack the expertise required for conducting deposit and loan operations, which could raise concerns over potential financial accidents, internal control issues, and insufficient consumer protection.
Jeong emphasized, "Since this is the first introduction of bank agency services in our country, it may be appropriate to observe the effects of expanding accessibility to face-to-face transactions and the impacts of the introduction of bank agency services before broadening its scope to prevent consumer losses."