An NH NongHyup Bank building in central Seoul / Courtesy of NH NongHyup Bank

NH NongHyup Bank, which has maintained the largest branch network nationwide in consideration of its unique role in supporting agricultural and rural communities, is now following other banks in closing branches.

This decision is driven by a sense of urgency to avoid falling behind other banks in future core business areas such as corporate finance, wealth management and platform services.

NongHyup explained that the planned closures are focused on the Seoul metropolitan area, aiming to improve operational efficiency of branches. However, concerns are rising that the move may reduce consumer accessibility, particularly in areas experiencing population decline.

According to industry officials, Wednesday, the bank plans to close 38 branches and merge them with nearby ones on Dec. 13 and 31. This exceeds the 36 branches closed by Woori Bank this year, which had the highest number of closures among domestic banks so far.

The majority of the closures will occur in the Seoul metropolitan area, as eight branches will be shut down in Seoul and six in Gyeonggi Province. Additionally, three branches in Busan will cease operations.

"We aim to provide higher-quality financial services to customers by scaling up and improving the efficiency of nearby branches," a NongHyup Bank official said.

However, the plan also includes eight branches located in areas designated as population-decline zones or areas of concern.

Population-decline zones refer to districts, cities or counties at high risk of local extinction, as designated by presidential decree. Among these, one NongHyup branch each in Jecheon of North Chungcheong Province, Boryeong of South Chungcheong Province and Yeongju of North Gyeongsang Province will be closed.

Additionally, five branches in areas of population concern such as Tongyeong of South Gyeongsang Province and Gangneung of Gangwon Province will also be closed.

The plan aligns with other banks' moves to reduce the number of physical branches amid the expansion of digital finance. This trend is particularly evident in regional areas, where the costs of labor and rent often exceed the profits generated by branch operations.

However, the high proportion of financially vulnerable individuals in these areas, such as older adults, raises concerns about diminished access to financial services.

Mindful of the concerns, financial authorities are stepping up efforts to address the issue.

During a press conference on Oct. 30, Kim Byoung-hwan, chief of the Financial Services Commission, the country's top financial regulator, vowed to actively review a measure utilizing local post offices as bank agency branches.

The Financial Supervisory Service, the financial watchdog, also discussed the issue during a closed-door meeting with bank CEOs on Nov. 14 and decided to operate a task force under the leadership of the Korea Federation of Banks.

Various solutions are expected to be discussed, including jointly operated branches among multiple banks as well as artificial intelligence-driven branches.