Korean brokerages and banks are accelerating their efforts to shut down branches to reduce costs and adapt to the growing trend of contactless transactions triggered by the COVID-19 pandemic.

Since the outbreak of the coronavirus, people have been relying more on digital transactions, avoiding direct human contact, for their banking activities and financial investments.

According to data from the Korea Financial Investment Association, the number of branches run by the top 10 securities companies, including Mirae Asset Daewoo, KB, Shinhan, Korea and NH Investment, stood at 556 in March this year, down 59 (9.5 percent) from a year earlier.

Viewed on a quarterly basis, there has been a continual decreasing trend over the last three years. Since the spring in 2017, about 20 percent of all local branches of the 10 major securities firms in Korea shut their doors.

Mirae Asset Daewoo has shown the most drastic fall in the number of branches over the years. The firm had 174 branches countrywide ― the largest number of branches ― in 2017, yet it has reduced the number of branches to 80.

KB Securities has also decreased to 75 as of March this year, from 112 branches in 2017.

A KB Securities official told The Korea Times that the firm’s move to close down some of its local branches is in line with its plans to focus on integrated financial centers ― a hybrid of a bank and brokerage house where customers can receive comprehensive counseling in terms of financial investment and strategies.

This strategy of converting the role of branches into specialized centers is shared by other securities firms like Mirae Asset Daewoo, NH Investment & Securities and Shinhan Financial Investment.

As the two largest firms in terms of the number of local branches closed some of their branches, Shinhan Financial Investment has become the securities company that now has the biggest number of branches at 88 in March this year. Mirae Asset Daewoo, Korea Investment and NH Investment & Securities, are closely chasing the firm at 80, 79 and 78, respectively.

It is expected that domestic securities firms’ efforts to cut down the number of local branches will continue in the second quarter.

The trend is also evident in the nation’s banking sector.

In the first quarter alone, the nation’s six major banks closed down a total of 73 branches, a sharp increase from a shutdown of only 15 branches during the same period last year. Not only have mobile banking services been steadily growing in popularity, but recently the global pandemic has discouraged visits to bank branches.

Against such a backdrop, banks are fast moving towards full-on digitalization, using the latest technologies of AI or biometric authentication, removing the need for face-to-face contact when carrying out personal banking.