The Domestic Stock Market and the Struggle for Financial Stability
The domestic stock market continues to experience fluctuations, leading to a noticeable trend among ‘ye-teck’ (deposit + financial technology) enthusiasts who manage their funds through bank deposits and savings. These individuals are increasingly looking for stable returns, which has prompted the banking sector to adopt various defensive strategies to prevent a significant movement of funds toward the stock market.
One of the primary methods used by banks is raising interest rates on representative deposit products. This move aims to make savings more attractive compared to the volatile nature of the stock market. Additionally, banks are introducing high-interest parking accounts and special sale products to retain customer funds.
According to the Korea Federation of Savings Banks’ consumer portal, as of the 9th, the average interest rate for one-year maturity fixed deposits at 79 domestic savings banks was 3.08% annually. This represents an increase of 0.1 percentage points from a month earlier, when the rate stood at 2.98% annually. Products with interest rates of 3% or more annually reached 242, accounting for 79% of the total. Just a few months ago, in October of last year, there were only 48 such products. While savings banks had previously lowered deposit rates to focus on soundness management following the real estate PF (project financing) insolvency crisis, they are now responding with interest rate hikes as capital outflows to the stock market have accelerated.
High-Interest Parking Accounts: A Strategic Move
Another key strategy employed by savings banks is the introduction of high-interest parking accounts. These accounts allow for frequent deposits and withdrawals while offering higher interest rates than regular accounts. Since interest is provided even if funds are deposited for just one day, these accounts are expected to help retain short-term outflows.
Welcome Savings Bank recently announced that it has raised the maximum interest rate for its parking account, the “Welcome Main Transaction Account,” from the existing 2.8% annually to 3.0% annually. This product offers the highest rate for up to 100 million Korean won. Similarly, DB Savings Bank launched the “DB Happy Parking Account,” which provides a maximum annual interest rate of 3.5% to new mobile sign-up customers.
Commercial Banks Adapt to Changing Conditions
Commercial banks, however, face a more challenging situation when it comes to significantly raising deposit rates. This is due to the decrease in household loan demand caused by the government’s policy of managing household loans. As a result, commercial banks are focusing on launching high-interest special sale products targeting the 2030s generation, who are known for having strong investment sentiments.
Woori Bank introduced the “Woori Bingo Savings” on the 3rd, which combines a bingo game with savings. This product offers a maximum annual interest rate of 10% based on mission achievements. The structure adds interest when missions are completed in daily life, such as depositing living expenses or exchanging foreign currency. Shinhan Bank is also selling the “Arcade Savings,” which applies a differential maximum annual interest rate of 20% only to the top 3% of mission game performers.
Additional Offers for Customers
In addition to these financial products, there are various membership programs designed to attract and retain customers. For instance:
- A monthly membership fee of 5900 won, with a discounted rate of 2900 won for newspaper readers.
- Access to 8 kinds of newspapers and magazines worth 55000 won, available exclusively through the Chosun Membership.
- Receive 7000 points that can be used like cash for smart shopping, all part of the Chosun Membership.