‘Digital divide’ bisects mobile banking industry

Home > Business > Industry

print dictionary print

‘Digital divide’ bisects mobile banking industry

테스트

Whenever Kang, a 64-year-old retiree, flips through the newspaper and comes across articles on “smart finance,” he turns the page. Articles about mobile and Internet banking services completely flummox Kang because he’s never used a smartphone before.

“It took a fairly long time for me to learn how to use Internet banking in the past,” Kang said, with a sigh. “I heard banks offer more interest to customers who sign up for their financial products using their smartphones but it’s a pity that I’m not one of those receiving benefits. I don’t have a smartphone.”

While local banks are pouring out smartphone-exclusive financial products that offer higher interest, not everyone has the ability to sign on. To middle-aged and undereducated men and women who are IT illiterate, such offers are truly over the rainbow.

The financial sector has its own so-called “digital divide,” an invisible barrier that separates customers who are fully at ease with IT devices and the mobile life and those who are clueless.

According to the banking industry last week, the annual interest rate for a 1-year fixed deposit has fallen to the 2 percent level. This is when a customer walks into a brick-and-mortar bank to buy the investment.

There are, however, financial products that offer annual interest rates at the upper 3 percent level if customers signs up online. For example, the maximum annual interest given to a smartphone-exclusive installment savings product offered by Shinhan Bank is 3.88 percent. Hana Bank offers a similar product to its customers with an annual 3.35 percent interest rate.

Those benefits are pretty much the preserve of young people who are fond of using IT devices. For many middle-aged and under-educated Koreans, they simply don’t exist.

According to a survey recently released by Hana Institute of Finance, among the bank customers using mobile banking, only 21.9 percent are in their 60s while 59 percent are in their 20s. Based on the survey, 50.3 percent of Koreans above the age of 50 said they don’t use mobile banking because they have security concerns. Other reasons given: Customers don’t have a smartphone (26 percent); they are not aware of how to use mobile banking (22.6 percent); it’s difficult to install mobile banking programs (13.9 percent). Respondents were allowed to check more than one answer.

Education is a major factor. The Hana survey showed that only 21.1 percent of those with educational level of middle school and under used mobile banking while 40.1 percent of university graduates did.

“The digital divide is even more serious if we consider those who have smartphones but only use them to make calls or send texts,” said Cho Nam-hee, head of the Financial Consumer Agency. “There should be measures that support this isolated group if financial benefits are being offered to mobile users.”

The benefits are not just higher interest rates. If customers sign up for a fund product online, they pay smaller commissions. Commissions on stock trading are also cheaper if done directly online or through mobile phones rather than through banks.

Experts are worried that the digital divide could lead to social conflict.

“It’s a good idea to promote smartphone banking targeting future customers in their 20s and 30s but there are also middle-aged customers including baby boomers that are also important customers for banks,” said Kim Jung-gu, business management professor at Sungkyunkwan University. “There is a need for banks to introduce tailored financial services so that these [middle-aged customers] do not feel isolated.”

By Sohn Hae-yong [angie@joongang.co.kr]

More in Industry

Eastar Jet's pilot union pushes for receivership of airline

ITC agrees to review its decision in Botox dispute

Hyundai Motor and union come to a wage freeze deal

Samsung Biologics signs supply deal with AstraZeneca

Tesla to increase battery cell purchases from suppliers including LG

Log in to Twitter or Facebook account to connect
with the Korea JoongAng Daily
help-image Social comment?
lock icon

To write comments, please log in to one of the accounts.

Standards Board Policy (0/250자)

What’s Popular Now