The Korea Herald


Authorities vow to bolster financial safety net for senior citizens

By Jung Min-kyung

Published : Aug. 31, 2020 - 14:32

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(Yonhap) (Yonhap)
With the COVID-19 pandemic accelerating digitalization of the financial sector and magnifying risks for individual investors, financial authorities recently vowed to create a safe and friendly environment for senior citizens here.

To help the elderly carry out smooth banking transactions, local lenders would be required to alert their customers when closing a brick-and-mortar branch with a high-proportion of senior customers, Deputy Prime Minister and Finance Minister Hong Nam-ki said during a meeting of economic-related ministers held Thursday.

The message has to be sent out three months prior to the closing and lenders would have to prepare an alternative offline space nearby.

The expansion of “untact” financial transactions has been pushing lenders to shut down brick-and-mortar branches and shift to online-focused services, which have been presenting hurdles for the elderly, unfamiliar with mobile banking.

Local lenders shut down more than 100 offline branches in 15 months, as of March, according to a watchdog Financial Supervisory Service data acquired and released by a lawmaker here on Friday. Local commercial banks operated a combined 3,711 branches in March, compared with 3,831 branches in December 2018.

In terms of the mobile banking usage by the elderly, the Bank of Korea said in a recent survey that only 8.9 percent of those over the age of 70 were able to use such services.

Taking a leaf out of the United States’ legal system that protects the elderly from financial exploitation and abuse, South Korea plans to draft a similar bill. It aims to protect senior citizens from local financial institutions’ mis-selling of high-risk products and possible discrimination in services.

The authorities would establish a separate monitoring system that enables them to scrutinize elderly exploitation cases in financial institutions and strengthen punishment for the institutions’ employees that breach any privacy protection codes.

Several senior citizens became victims of the derivatives-linked funds fiasco that broke out last year, as they faced huge losses in principal investments, due to some financial institutions’ alleged decision to not properly warn them of entailed risks.

Statistics Korea said last year that Korea is projected to become the world’s most aged society by 2067, with its low birth rate combined with a fast-aging population. Those in the age range over 65 are expected to account for 33.9 percent of the nation’s entire population, it added.

By Jung Min-kyung (