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Competition among commercial banks to attract new customers by placing installment savings products front and center is heating up. Lenders are broadening consumer touchpoints not only by raising interest rates to induce subscriptions, but also by rolling out themed products tied to events such as sports. As growing domestic stock market volatility drives capital into time deposits, installment savings are being utilized not merely as a liquidity-gathering tool, but as a strategic channel to establish relationships with new clients.

According to financial industry sources on the 6th, Woori Bank launched the 'Woori Team Korea Installment Savings 2' on the 4th ahead of the Aichi-Nagoya Asian Games. The product applies preferential interest rates based on the cumulative number of cheering comments posted on Woori Bank's bulletin board and South Korea's final performance at the games. A key feature is leveraging a major national sporting event to engage customers who have had no prior transactions with Woori Bank.

Earlier last month, Shinhan Bank also introduced 'Shinhan Installment Savings 9th Dan', offering high interest rates tailored for new depositors. The bank provides a preferential rate of 5.0% points per year to customers who held no Shinhan Bank deposit, installment savings, or housing subscription accounts in the preceding six months, and 6.0% points for subscriptions at the maximum monthly deposit ceiling of 300,000 won. The product surpassed 100,000 accounts sold within two weeks of launch.

As lenders continue expanding installment savings lineups, liquidity across the market is steadily flowing in. Last month, the balance of time installment savings across the five major banks (KB Kookmin, Shinhan, Hana, Woori, and NH NongHyup) stood at 45.0757 trillion won, rising by 73.4 billion won from the previous month. The balance had expanded for three consecutive months—rising by 409.5 billion won in April, 85.2 billion won in May, and 267.7 billion won in June—before dropping by 1.9179 trillion won in July, only to rebound into positive growth in August.

Behind the recent push to roll out installment savings products lies a broader strategy to lock in new customers. Installment savings are critical for acquiring new clients because, once opened, they tend to sustain a business relationship over an extended timeframe. Unlike short-term fixed-term deposits where capital is parked all at once, regular monthly contributions create ongoing customer touchpoints.

Lenders can also leverage preferential rates to encourage cross-selling into payroll transfers, credit cards, and other financial services, producing strong lock-in effects. According to the 'Korea Financial Consumer Trends' study conducted last year by the Hana Institute of Finance, the second most common reason Korean financial consumers chose their primary bank was 'frequent debit and deposit transactions such as automatic transfers and living expenses.'

Consequently, major banks are steadily raising rates on installment savings products. Industrial Bank of Korea (IBK) will hike rates on key time installment savings products by 0.25% points per year starting on the 7th. KB Kookmin Bank, Shinhan Bank, and Woori Bank also raised rates on their flagship savings products by roughly 0.2% to 0.3% points in late July. Shinhan Bank raised rates again on the 3rd across core savings products, including standard time installment savings, while Hana Bank likewise hiked savings rates by 0.2% to 0.3% points in late July.

An industry source commented, "The current installment savings competition goes beyond merely boosting deposit volumes; it strongly serves to acquire new customers and expand transactional foundations," adding, "In banking, market dynamics rarely shift overnight, so long-term profitability ultimately hinges on how many customers a firm can secure continuous, enduring relationships with."

                                                                                                            Chae Jong-il