[Life, Unprepared] South Korea’s rapid financial digitization in the eyes of seniors

[Life, Unprepared] South Korea’s rapid financial digitization in the eyes of seniors

An elderly person (right) chats with a bank worker at the branch of Hana Bank in central Seoul. (Hana Bank)

This is part of a series of articles on the financial activities of the elderly in the context of the rapid digitization of the financial sector. –Ed.

Yang Kyung-soon, a 72-year-old woman living in a small neighborhood of Uiseong, North Gyeongsang Province, takes a two-hour round trip by bus to visit her bank. Twice a month, Yang goes downtown to pay her utility bills.

She has banking apps on her smartphone that can process the payment in a second, but she feels more comfortable paying bills in person, not to mention the free coffee and the friendly chat with the bank clerks. .

“The bank staff taught me how to use mobile banking, but it always seems complicated to register personal authentication certificates on the mobile app or apply for mobile-only financial programs,” he said. she declared.

Yang is one of many members of a rapidly aging population that still relies heavily on offline banking in South Korea, the most connected country in the world currently undergoing massive financial digitization.

The penetration of digital banking services in Asia’s fourth-largest economy is comparable to that of New Zealand at 99% in 2018. This is the highest figure among advanced Asian countries, including Japan and China, which recorded 77% and 84% respectively. according to a McKinsey report titled “Asia Banking in the Digital Consumer Age”.

But for many elderly people born during the Korean War era from 1950 to 1953, parking their money on the recommendation of bank workers seems to be safer than pressing yes or no buttons on cell phones.

According to a survey conducted by the Bank of Korea in 2018, only 6.3% of respondents over the age of 70 had made financial transactions through the mobile apps of commercial banks in the past three months, which was good. below respectively 87% and 76.2% of people. in their thirties and forties.

Subscribers aged 60 or over of the country’s internet-only banks, including KakaoBank and K bank, accounted for 3% of total users, according to representative Yoo Dong-soo of the ruling Democratic Party of Korea, citing data from two lenders. .

Despite seniors’ reluctance to embrace digitization, the country’s major commercial banks closed dozens of outposts last year as part of digital innovation plans.

The number of physical bank branches decreased from 304 to 6,405, according to data from the Korean Federation of Banks. Most branch closures took place in the capital region and metropolitan cities.

A digital divide also means a lack of access to lucrative information. Yoon Jeong-hwan, a 56-year-old office worker living in Gyeonggi Province, recently learned that products found only online may charge less commission fees.

“Despite the benefits of digital banking, I normally end up resorting to face-to-face consultations with bank workers when making important monetary decisions, especially when it comes to asset management,” a- he declared. “This way I feel relieved, but I feel like I’m losing the opportunity to invest in a more profitable product.”

Small steps for digital finance

Some seniors are calling for a soft landing of digital transformation in the financial sector.

Kim Hong-kwan, a 60-year-old former financier who worked at Woori Financial Group for over 30 years, recently became the “digital finance teacher” for seniors unfamiliar with internet banking and mobile.

Kim Hong-kwan, an expert instructor at the nonprofit Financial Education Council in her late 60s, teaches people aged 65 to 80 at the Jeonggwan Senior Welfare Center in Gijang-gun, Busan, how to use digital banking services for children. local lenders via Zoom, May 23. (Courtesy Jeonggwan Senior Welfare Center)

“I have been teaching people aged 65 to 80 how to use digital banking services from local lenders since May of last year through Zoom. With concerns about financial scams targeting the elderly, many are reluctant to conduct financial transactions through their smartphones, ”he said.

After retiring, Kim began serving as an expert instructor at the nonprofit Financial Education Council. The organization launched educational programs for the elderly in May last year, funded by the Credit Card Fund, with the aim of bridging the digital divide, or the knowledge gap between young and old in the financial sector, while banks are developing innovation in digital finance.

“The point is, even after taking my classes, older people still have a hard time activating mobile banking apps on their own and going to nearby physical branches or doing ATM transactions,” said Kim.

“The digital transformation underway in financial circles is inevitable, but it takes time for older people to adjust to the rapidly changing financial environment. Local lenders should at least slow down the pace of ATMs closing, ”he added.

As part of its efforts to help seniors adapt to digital trends and technologies in the financial sector, the Financial Services Commission last year announced a comprehensive policy framework including guidelines that advise local banks to resolve difficulties when using mobile apps and bank websites.

Currently, the country’s four big banks – Shinhan, KB Kookmin, Woori, and Hana – offer separate versions of their mobile banking apps designed specifically for seniors, featuring large letters and easy-to-understand illustrations.

They also offer mobile educational material that informs senior customers about their new banking services as well as how to request contactless financial programs.

Experts say local financial authorities and lenders should create more in-person education opportunities for older people to improve their digital literacy.

“Having bank workers responsible for delivering digital education to the elderly in offline bank branches might be an option,” said Byun Hae-won, a researcher at the Korea Insurance Research Institute.

“In partnership with local governments as well as non-profit educational institutions, the financial regulator and relevant government agencies should train qualified instructors for digital higher education, while increasing spending on related educational programs. “

By Choi Jae-hee ([email protected])

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