Proving unprofitable, ATMs start to disappear

As the bankbook fades in popularity, ATMs are beginning to vanish as well. According to the Financial Supervisory Service, the number of ATMs run by domestic banks peaked at the end of 2011 with 56,102 machines and has declined since then, marking 53,562 units last year.

The ATM was first introduced by British bank Barclays in 1967. Back then, ATMs caused as big of a splash in the banking industry as financial technology, or fintech, is making today. As ATMs proliferated, many bank tellers saw themselves becoming redundant. Ironically, as ATMs now fade, the number of bank employees is on rise - to 118,703 last year from 110,529 a year earlier.

One reason for the decline of ATMs is a decrease in bank branches where the machines are installed. Between 2011 and 2014, 64 domestic bank branches and local offices shut their doors, largely due to the rise of internet and mobile banking services.

However, ATMs are disappearing much faster than bank branches. In many cases, this is because the fees charged by the machines are no longer sufficient to make them profitable.

“The income from bank charges made at ATMs isn’t even sufficient for managing the machines, and it is a lot easier to close the machines than to adjust the workforce,” said one business insider. “This is why ATMs installed outside stores are diminishing as well.”

In 2011, the banking industry cut ATM fees across the board after the political and financial authorities accused financial institutions of overcharging. Today, however, each domestic ATM loses 1.66 million won ($1,500) annually, according to estimates by the Korea Institute of Finance. Some argue that ATM fees ought to increase, but financial authorities disagree.

“The reason why banks are losing money on ATMs is partly because the banks themselves cut fees to attract more customers,” said an official at the Financial Service Commission. “The number of domestic ATMs is still larger compared to other countries, so customers shouldn’t be concerned about being inconvenienced.”

On the other hand, some suggest jointly operating ATMs to improve customer convenience and lower costs at the same time. “If banks run ATMs outside stores together through cooperation instead of each bank running their own ATM, costs will go down and customers won’t have to pay more when transferring to other banks,” argued Kim Woo-jin, a researcher at the Korea Institute of Finance.

BY CHO MIN-GEUN [kim.hyunmin@joongang.co.kr]