Why branch-heavy NH Bank is accelerating its aggressive push into digital banking

Jun 29, 2026, 09:50 am

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NH Bank CEO Kang Tae-young utilizes holographic display technology to present the bank's AI future vision during a ceremony held at the NH Bank headquarters in Jung-gu, Seoul. / Courtesy of NH Bank

"We will forge a new standard for South Korean finance by transforming into an agentic AI bank."

Kang Tae-young, CEO of NH Bank, expressed his determination to stake the company's future on an enterprise-wide AX (AI Transformation) at a vision proclamation ceremony held early this month at the NH Bank headquarters. In alignment with this bold ambition at the event, CEO Kang made his appearance as a three-dimensional image utilizing holographic technology to explain the future vision, visually demonstrating an intense commitment to digital transformation. It was a scene with a distinctly different texture from the traditionally conservative and field-oriented image firmly associated with 'Nonghyup.'

Why is NH Bank accelerating its AI and digital transformation at a faster pace than other competing banks? NH Bank's offline sales network—underpinned by branches densely distributed across the nation—is cited as the bank's greatest strength. As of the end of the first quarter of this year, its branch count stands at 1,067, which is the highest among commercial banks. Amidst a broader trend where other banks are reducing branches for cost efficiency, NH Bank has conversely exhibited moves to expand its branches. This is the precise point that prompts curiosity as to why NH Bank, with such a solid face-to-face business foundation, is instead pouring significant efforts into strengthening its non-face-to-face capabilities.

The primary background factor is identified as the unique institutional nature of NH Bank, which makes it difficult to easily reduce branches. In keeping with Nonghyup's foundational purpose of supporting agricultural workers and promoting balanced regional development, the bank is performing the role of core financial infrastructure in every corner of local municipalities. In some regions facing population extinction, NH Bank branches alone remain to serve as financial windows for local residents even after other commercial bank branches have vanished. While branch closure procedures themselves are not inherently restrictive, the bank sits in a position where it cannot easily decide on branch closures, as it jointly shoulders the public-interest role of guaranteeing financial accessibility.

Because it cannot cut costs by reducing branches like other banks do, NH Bank is searching for solutions by driving productivity upward. The methodology involves applying AI technology to tasks capable of automation, and broadening the scope of non-face-to-face services so that customers can process simple transactions without visiting a brick-and-mortar branch. Accordingly, employees freed from repetitive tasks can focus more intensely on other high-value-added operations, such as wealth management and corporate finance. In other words, NH Bank's AX acts not as a tool to replace offline branches, but closer to a strategy to sustain the existing offline branch network more efficiently.

There is also the objective of shedding the image of being a "digital laggard." Because NH Bank accommodates a high proportion of customers accustomed to face-to-face transactions—such as senior citizens and residents in farming and fishing communities—it has historically received evaluations that its digital competitiveness lags relatively behind. As of the end of May this year, NH Bank's non-face-to-face sales proportion stands at 78%, a level that remains lower than other banks hovering in the 80% to 90% range.

Under these circumstances, observations are emerging that the AI competition in the financial sector, which is just beginning to unfold in earnest, could serve as a "reversal card" for NH Bank as it aims to shrink the digital divide. By utilizing AI, the bank can draw not only new customer segments but also face-to-face customer cohorts unfamiliar with digital tools into non-face-to-face touchpoints, and in that process, transform its image from a digital laggard into a fresh competitive edge as an "AI-leading bank."

Voices within the financial sector view that the success or failure of NH Bank's AX will dictate the bank's long-term competitiveness. In the first quarter of this year, NH Bank's cost-to-income ratio surpassed the 50% mark for the first time in four years. At a juncture requiring a sweeping structural overhaul, AX is moving beyond simple digital transformation to become an indispensable mandate for NH Bank to sustain its role as core regional financial infrastructure. The key lies in execution capability. If the blueprint of an AI-leading bank emphasized by CEO Kang Tae-young is to avoid ending up as a mere slogan, the bank must deliver tangible performance that can be perceived directly at actual sales fields and customer touchpoints.

Han Sang-wook

#NH Bank #AI