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RETAIL BANKING | Cesar Tordesillas, Korea
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44% of South Koreans distrust banks

Customer confidence in banking continues to deteriorate in Korea, according to a survey.

This is attribued to a series of recent scandals and reckless lending practices at major commercial banks as well as the suspension of savings banks have damaged the credibility of the banking sector.

As a result, a growing number of people are doing business with more than two banks.

According to the 2012 global consumer banking survey by Ernst & Young, 44 percent of Koreans said they lost trust in the industry after the eurozone financial crisis. The survey was conducted in June on about 28,000 banking customers across 35 countries.

It is higher than neighboring countries such as Japan and China, which stood at 28 percent and 30 percent, respectively, as well as higher than the average of the surveyed countries at 40 percent.

The London-based consulting firm also said the survey result shows that many Korean customers distrust their banks, and as a result, a number of clients are no longer loyal to just one bank with many respondents doing business with more than two banks.

About 37 percent of Korean customers said they had changed banks or had the intention to change them within a year.

The portion of people doing business with more than two banks stood at 89 percent, much higher than the global average of 59 percent.

Korean customers said the main reason for doing business with multiple banks was due to the availability of more favorable interest rates and lower transaction fees at different banks.

In comparison, respondents in other countries said they did business with more than two banks because of better products and services.

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