Major South Korean Banks Accelerate Branch Closures Despite Record Profits

The brick-and-mortar banking era in South Korea is rapidly shrinking. According to recent industry data, the number of physical bank branches operated by the country's top lenders hit a new record low in 2025, continuing a downward trend driven by the aggressive shift toward digital finance.

TL;DR

• Historical Lows: The number of branches operated by Korea's top five banks fell to 3,748 in 2025, a significant drop from over 4,400 just five years ago.
• Digital Shift: Banks cite a 30% decline in foot traffic and physical workloads as customers migrate to mobile-first "non-face-to-face" services.
• The Profit Paradox: The closures come despite record-breaking net profits of 13.99 trillion won ($9.67 billion), sparking criticism over the marginalization of elderly customers.

What Happened

Data released on Tuesday reveals that South Korea's five major commercial lenders—KB Kookmin Bank, NH NongHyup Bank, Shinhan Bank, Woori Bank, and Hana Bank—operated a combined ,3748 branches as of December 2025. This represents a reduction of 94 branches within a single year and a sharp decline from the 4,424 branches recorded in 2020.

Bank officials state that branch consolidation is an "inevitable" response to the expansion of digital banking. Over the past five years, both the volume of in-person tasks and the number of visiting customers have plummeted by more than 30%. This trend extends to automated infrastructure as well; the Financial Supervisory Service (FSS)—Korea's integrated financial regulator—reported that the total number of ATMs nationwide fell to 29,810 by mid-2025, down from over 37,000 in 2020.

Korea Context

The "Big Five" banks mentioned dominate the Korean financial landscape, often operating as the primary retail arms of massive financial holding companies. While South Korea is globally recognized for its high internet penetration and tech-savvy population, it is also one of the world's fastest-aging societies. This creates a friction point known as the "digital divide."

The Financial Supervisory Service (FSS) has previously urged banks to consider the social impact of branch closures, particularly for the elderly who rely on physical passbooks and face-to-face consultations. However, the allure of cost-cutting remains strong as banks face competition from "neobanks" or internet-only lenders like KakaoBank and K-Bank, which operate without any physical branches at all.

Why Global Readers Should Care

The situation in Korea serves as a case study for the "efficiency vs. accessibility" dilemma facing global banking. Despite the massive reduction in physical overhead, the combined net profit of the four largest financial groups reached a record 13.99 trillion won ($9.67 billion) last year, primarily driven by interest income.

For international investors and analysts, this highlights a significant structural shift: Korean banks are successfully transitioning into high-margin, low-overhead digital platforms. However, they also face increasing regulatory and public pressure to fulfill Corporate Social Responsibility (CSR) goals, as the rapid disappearance of physical infrastructure risks alienating a significant portion of the domestic consumer base.