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| A panoramic view of Korea's largest financial district of Yeouido in Seoul / gettyimagesbank |
By Lee Min-hyung
Brokerage houses are accelerating the closures of sales offices, as part of efforts to cut fixed costs and focus business on the wealthy, data showed Monday.
According to data from the Financial Supervisory Service (FSS), the number of sales offices operated by securities firms here has been rapidly declining for the past few years. The figure came in at 1,070 in 2016, but fell to 799 as of the end of 2022. But the number is forecast to decline further amid the rise of mobile stock transactions.
KB Securities plans to shut down six sales offices in Seoul this month alone, to realign its sales channels to focus on wealthy customers by operating a few large offices. Other brokerages are taking similar steps in line with shifts in sales strategy.
A large portion of retail investors utilize securities firms' mobile trading platforms. So firms are adjusting their focus to offer customized wealth management services through sales offices that primarily target the wealthy.
Other data from the Korea Financial Investment Association showed that Samsung Securities had the greatest decline in its sales offices for the past year. As of the end of March this year, the company operated 29 offices, down by more than 30 percent from a year ago.
"The market environment has rapidly changed during the pandemic era when more retail customers jumped into a buying spree of local stocks via mobile trading systems from each brokerage house," an official from a brokerage house said. "The trend remains in place even after the pandemic. For now, securities firms are focusing more on maximizing sales efficiency amid unstable stock market sentiment and growing woes of recession."
Even if the shutdown of sales offices sparked concerns that the elderly ― who are not accustomed to mobile trading ― will fall victim to the sales practice change, some securities firms are offering services ― such as operating online consultation via mobile devices.
Other financial sectors are also slashing their offline sales channels for a similar reason. Data from the FSS showed that the number of banks' sales offices reached 5,804 as of the end of 2022, down by 294 from a year ago.
"More sales offices will lose their ground to online channels due to the rapid rise of internet-only banks or securities firms' and customers' growing preference for mobile transactions," the official said.
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