Restructuring in local banks is expanding towards improving workforce structure and maximizing efficiency through technological development of FinTech (Finance+Technology).
The labor and management at KB Kookmin Bank have entered into a final agreement to initiate a voluntary retirement program for workers aged 55 and older to whom the wage peak system applies, as well as any regular workers. Even younger workers with tenures of at least 10 years are eligible for the program. Workers subject to the wage peak system would receive a maximum lump sum payment of 27 months of average ordinary wage while regular workers would receive a maximum lump sum payment of 36 months of average ordinary wage in retirement compensation. The number of workers at KB Kookmin Bank is expected to fall below 20,000 from 20,540 last September depending on the number of workers who take up the offer. Shinhan Bank is also considering a voluntary retirement program in early 2017.
Voluntary retirement is in action in other companies as well. Until 7 December, Standard Chartered Bank (SC Bank) offered a voluntary retirement package to directors aged 50 and above, and team leaders aged 49 and above who also had tenures of at least 10 years. The targeted number of voluntary retirees is around 200. Those who ultimately leave SC Bank will receive a maximum of 50 months in salary as retirement compensation.
Four thousand workers voluntarily retired from banks last year, with thousands more expected to leave this year. Personnel congestion in middle management at most local banks is the main reason.
The expansion of FinTech and mobile banking has also contributed to reducing bank workforces. According to the Bank of Korea, 10.1% of all financial service transactions last September were offline. This percentage has continued to decline since 2012, when it was 13.0%. On the other hand, internet banking has grown from 33.9% to 42.7% in the same period.