A foreign national consults with a bank teller at a branch in Ulsan specialized for foreign workers, March 2024. Courtesy of BNK Kyongnam Bank

Regional banks are ramping up competition in providing specialized services for foreign nationals, anticipating they will soon become a key customer base, industry officials said Wednesday.

While commercial banks remain reluctant to introduce credit loan products for foreign nationals, regional banks are taking a more open approach to attract customers. They are also expanding dedicated branches and outreach services, such as financial education.

Jeonbuk Bank, based in North Jeolla Province, is making some of the most notable moves. It has led the market since 2016, when it became the first to introduce credit loan services for foreign nationals.

JB Financial Group Chairman Kim Ki-hong has even set a goal of reaching 1 trillion won ($688 million) in loans for foreign nationals this year, more than doubling last year's balance of 400 billion won. Jeonbuk Bank serves as the banking arm of the group.

BNK Kyongnam Bank, based in South Gyeongsang Province, also introduced a credit loan product for foreign workers last October, while Busan Bank plans to launch a similar product by the end of the year.

"South Gyeongsang Province has the highest number of foreign workers outside of Gyeonggi Province," a BNK Kyongnam Bank official said. "To address the growing needs of foreign workers amid shifts in the labor market structure, we have launched this loan product."

Beyond financial products, regional banks are also working to expand their customer base by providing financial education services and operating mobile branches — vehicle-based banking units equipped with automated teller machines.

Regional banks have long been a pillar of support for residents and businesses. However, with an aging population and economic growth concentrated in capital regions, they have been in urgent need of a new growth market.

Then came the young foreign nationals. According to the Financial Supervisory Service (FSS), foreign nationals who entered Korea with a non-professional employment (E-9) visa rose from 159,000 in 2021 to 247,000 in 2023. Given the government's policy to attract more foreign workers, the figures are likely to continue rising.

International students pose at Yeungnam University in Gyeongsan, North Gyeongsang Province, in this November 2024 file photo. Newsis

Their income levels are also increasing. According to Statistics Korea, as of last May, the number of foreign workers earning a monthly wage between 2 million and 3 million won increased by 10.8 percent from the previous year.

This growing financial capacity has drawn the attention of regional banks, which are now looking to expand their customer base by increasing their presence in the credit loan market.

Until now, financial services in the banking sector have been largely limited to basic offerings such as overseas remittances and account openings. Loans — the core of banking products — were virtually unavailable.

"Risks can be mitigated by strictly enforcing employment duration and annual income requirements based on visa type or by extending loans only to foreign workers employed by companies with a proven record of stable labor management," an industry official said. "However, due to risk factors, their interest rates remain high."

For instance, Jeonbuk Bank's foreign national loan product, "JB Bravo KOREA," carries an annual interest rate of 9.86 percent to 17.9 percent. Similarly, BNK Kyongnam Bank's "K Dream" credit loan product offers interest rates ranging from 6.38 percent to 15 percent per year.

Looking ahead, competition in this market is expected to intensify as commercial banks also expand their presence.

The number of bank branches specializing in services for foreign nationals increased from 61 in November 2021 to 88 in September 2024, according to the FSS.

"The economic growth of foreign nationals, driven by population increases, is expected to further enhance the competitiveness of the domestic foreign market," the Hana Institute of Finance wrote in a report released last December. "As this market grows, businesses targeting foreign nationals will need to become more sophisticated."