The Rise of Mobile Banking: The Evolution of Online Banking Services

The banking industry has been undergoing a significant transformation in recent years, with the rise of mobile banking revolutionizing the way customers access and manage their finances. Once considered groundbreaking for enabling account holders to access banking services remotely, internet banking is now losing its shine as mobile banking gains popularity. Today, mobile banking accounts for over 90 percent of non-face-to-face transactions, prompting commercial banks to explore options to scale down Internet banking operations due to their substantial operational costs.

The Shift Towards Mobile Banking

In response to the growing dominance of mobile banking, banks are actively making changes to their services. KB Kookmin Bank, South Korea’s largest bank, recently discontinued the acceptance of new loan sign-ups via its web banking platform. Instead, customers are encouraged to use the bank’s mobile app, KB Star Banking, or visit physical branches for loan applications. K-Bank, an internet-only bank, made a similar move by discontinuing its web banking services for retail customers, ensuring that its offerings are exclusively available on its mobile platform. This shift encompasses not only loan services but also deposits, credit cards, and various other financial services.

The Downfall of Internet Banking

The decline of Internet banking can be attributed to several factors. One of the main reasons is the complexity of Internet banking services, which often require multiple downloads of security software, such as Active X. This complexity has contributed to the rise of more convenient mobile banking platforms, which offer a seamless user experience without the need for additional software installations. Furthermore, internet banking services have a limited customer base compared to mobile banking, making them less cost-effective for banks. The annual operational costs, including labor costs, for Internet banking are estimated to run into the hundreds of millions of won.

The Role of Internet-Only Banks

Internet-only banks have played a pivotal role in reshaping the landscape of online banking. These banks, introduced in 2017, took a different approach by placing a strong emphasis on mobile apps. Their focus on mobile banking services has led to a consistent upward trend in registration and usage since 2019. According to data from the central bank, the growth rates of Internet banks in terms of registered customers and transaction volume have outpaced those of commercial banks, with a 2.5 times and 2.7 times increase respectively since 2019.

The Growth of Mobile Banking Transactions

The shift towards mobile banking is evident in the significant increase in mobile banking transactions at domestic banks in South Korea. In the first half of 2023, mobile banking transactions reached 19.1 million, marking a substantial 19.2 percent year-on-year increase. The total amount of these transactions also saw an uptick of 2.4 percent, reaching 14.7 trillion won. Mobile banking transactions accounted for a staggering 86.9 percent of overall online transactions for both Internet and mobile banking, reaching an all-time high.

The Benefits of Mobile Banking

Mobile banking offers several advantages over traditional internet banking. The convenience of accessing banking services anytime, anywhere, has made it the preferred choice for many customers. With a mobile app, users can easily check their account balances, transfer funds, pay bills, and even apply for loans, all from the palm of their hand. Additionally, mobile banking apps often provide enhanced security measures, such as biometric authentication and real-time transaction alerts, giving users peace of mind when managing their finances.

The Future of Online Banking

The shift towards mobile banking is not limited to South Korea; it is a global trend. As smartphones become more prevalent and internet connectivity improves, the demand for mobile banking services will continue to rise. Commercial banks around the world are taking note of this trend and investing heavily in their mobile app services. By prioritizing mobile banking, banks can streamline their operations, reduce costs, and provide customers with a seamless banking experience.


The rise of mobile banking has revolutionized the way customers access and manage their finances. With its convenience, enhanced security, and user-friendly interfaces, mobile banking has surpassed Internet banking in popularity. As more customers embrace mobile banking, commercial banks are actively scaling down their Internet banking operations to reduce costs and cater to the changing demands of their users. The future of online banking lies in the palm of our hands, as mobile banking continues to evolve and shape the banking industry worldwide.

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