This blog post examines the sales structure hidden behind the image banks project to appear neighborly, and the reality of incomplete sales. It explores when we became accustomed to banks’ words and how consumer trust is exploited for profit.
Banks are not always neighbors
We think of banks as ‘honest businesses’. We believe that because they handle money, they must be accurate and transparent. Moreover, since they safely store our money, pay us interest, and let us withdraw it whenever needed, banks feel like an invaluable place. To meet these expectations, banks always provide the best service. The tellers at the counters are excessively friendly, and the bank interiors are always clean and luxurious, making you feel better just by stepping inside. With security guards stationed there too, you feel reassured. So, the bank’s advertising slogans promising ‘family-like care’ feel even more trustworthy.
“Happiness awaits there. Finance that connects people to people.”
“My life flows smoothly”
“For a happy 2026 in Korea, we will nurture your joy, one step at a time”
Looking only at these slogans, the bank seems like a reliable neighbor, a good place that provides financial help during difficult times. But does the bank truly treat customers like neighbors and do its best, just like the ads say? Do bank employees genuinely strive to safeguard and grow their customers’ money? To cut to the chase, this belief stems from our profound ignorance about banks and bankers. When bankers recommend specific products and persuade customers to choose them, it’s not to protect or grow the assets of customers lacking financial knowledge. There’s ‘another reason’. Let’s hear from the experts.
“There’s only one reason employees recommend specific products: because headquarters issues promotions. They receive instructions to sell these products. Moreover, when these products sell, employees receive greater incentives, which is why they push specific products. Doing so positively impacts their performance evaluations. Otherwise, why would they bother selling specific products?”
“Whether it’s a bank or a securities firm, there are periods when they must focus on selling specific products. During those times, they have no choice but to recommend those products to customers. Sometimes they push for card sign-ups, other times funds, and yet other times insurance products. This is because internal quotas are set, requiring them to sell large volumes within a specific period.”
This story might be hard to believe. They claim to act in the customer’s best interest with such sweet talk, yet the reality is it’s all about boosting sales. So, at the very least, you’d expect bankers to know the products thoroughly and recommend the most advantageous ones for investors. But this expectation is also shattered without exception. Let’s hear from Attorney Jeon Young-jun.
“A renowned American professor once said this: Financial products that even Wall Street doesn’t fully understand are being sold to ordinary individuals in Korea. That’s the biggest problem. Products that neither experts nor individuals understand are being traded openly. When products that even financial experts don’t fully grasp are being sold, it’s practically impossible for the branch employees selling them to know everything about them. Ultimately, sales are happening based on directives from headquarters.”
Banks don’t know everything either
The very assumption that bank tellers know everything might be the problem. According to the Financial Investment Association, as of July 2012, the number of funds sold domestically reached 10,004. This was the highest level in the world at the time. With such a vast array of financial products, is it truly possible for a single bank teller, no matter how diligently they study, to grasp and analyze them all?
Understanding tens of thousands of complex and intricate products is practically impossible.
From the customer’s perspective, this is truly an absurd situation. Common sense dictates that the seller should know their product better than anyone else. Typically, a competent salesperson deeply understands the product to help the customer make the best choice. But banks are different. Bankers sell products they don’t fully understand. And they don’t take responsibility for the consequences.
So what happens when customers suffer losses after purchasing financial products without receiving adequate explanations? Consider the case of Kim Soo-cheol (pseudonym), who suffered losses after investing in an overseas fund.
“When I bought the fund, the bank employee explained it was a product investing in Samsung Electronics and Kookmin Bank, and only mentioned an annual return rate of about 12 percent. But two years later, when the Lehman Brothers crisis hit, they changed their story, saying it wasn’t invested in Samsung Electronics but in Lehman Brothers.”
Countless fund promotional materials emphasize high returns and focus on conveying an image of exceptional stability. However, the actual sales process for financial products is often quite ‘sloppy’. This is according to attorney Jeon Young-jun.
“When investing in financial products, we go to a financial institution, fill out a contract, and sign a confirmation stating we received an explanation of the product. But in reality, the explanation is often perfunctory, and the process usually ends with just signing a few places highlighted with a highlighter by the bank employee.”
It’s common for bankers to emphasize only the advantages of a specific financial product while barely explaining its disadvantages. Although they should explain not only the product’s profitability but also its inherent risks, this process is frequently omitted. Let’s hear from Song Seung-yong, Director of Hope Financial Planning.
“With interest rates being low these days, many people are dissatisfied with the interest rates on regular savings or time deposits. Many complex financial products with derivative characteristics have been launched targeting such customers, with ELS and savings insurance products being prime examples. ELS can generate profits if certain conditions are met, but if those conditions aren’t met, significant losses can occur. There are also numerous cases of people suffering losses from improperly subscribing to ELS products. Furthermore, banks sell many savings insurance products through bancassurance channels. Some customers sign up thinking it’s a savings account, only to later discover it’s an insurance product requiring a 10-year commitment. Attempting to withdraw funds after 1-2 years results in losses, yet bank tellers often emphasize only the advantages like high interest rates and tax exemption.”
While unfamiliar to the general public, the financial sector distinguishes this as ‘complete sales’ versus ‘incomplete sales’. Let’s examine this further through an explanation by Song Seung-yong, Director of Hope Financial Planning.
“If you subscribed to a product with a full understanding of it, that is ‘complete sales’. However, if you subscribed without fully grasping both the good and bad points, it can be called ‘incomplete sales’.
In reality, most drawbacks are glossed over while only the advantages are emphasized. Therefore, rather than thinking, ‘This product is so good that the bank is recommending it for my benefit,’ it’s necessary to recognize that ‘The bank or securities firm is trying to sell this product heavily right now.’ Only then should you judge whether it’s the product you want and subscribe only when you truly need it to protect your money.”
This reality is highly unpleasant from an investor’s perspective and, to put it bluntly, could even be seen as ‘fraudulent.’ Failing to explain a product’s drawbacks is an act of distorting its characteristics, amounting to an attitude of refusing responsibility for any resulting harm. Many fraudulent schemes also involve concealing and distorting specific information, leading to irresponsibility.
Does this sound overly exaggerated? Do you want to say that the positive image you’ve held of banks until now has collapsed all at once, making it hard to believe? But this is reality. These are the words of Song Seung-yong, Director of Hope Financial Planning.
“Companies we know well, like Samsung Electronics or Hyundai Motor, make profits by selling home appliances or cars. Financial companies, namely banks, are simply companies that make profits by selling financial products. Especially since foreign investment capital became able to invest in domestic banks, banks have increasingly shifted toward a profit-driven focus. With growing pressure to pay large dividends to major shareholders, their character has changed from being customer-centric to shareholder-centric. We can see that our country’s financial companies are also increasingly moving in that direction.”
Banks are ultimately just businesses. They are not your friends, helpers, or neighbors. Their sole purpose is to sell financial products and profit from them. This means that when your interests conflict with the bank’s, the bank will inevitably prioritize its own interests.
Bank employees actively seek out customers who are relatively easy to persuade. When headquarters issues a directive to sell a specific product, would they choose a customer who is financially savvy and asks many questions, or one who trusts the bank employee and is unfamiliar with finance? As a result, the primary targets become seniors in their 60s and 70s, housewives lacking financial knowledge, and people who suddenly receive compensation or retirement funds and don’t know how to manage them. Indeed, a significant number of those harmed by misguided investments fall into this category. In the past, banks strongly projected an image as “a place to safely deposit money” and “a place where, even if profits aren’t large, at least you won’t lose money.” This made people more willing to entrust large sums to banks.
Let’s continue listening to Song Seung-yong, Director of Hope Financial Planning.
“In the past, commercial banks performed a certain degree of public service. They provided low-interest housing loans for ordinary citizens and supplied industrial capital to businesses. However, starting in the 1990s, their corporate nature—prioritizing their own profits—became increasingly dominant over these public functions.”
Now we must change how we view banks. We should not place excessive trust in banks. This does not mean cutting off all dealings with banks or avoiding all investments. However, we must recognize that every financial product has both advantages and disadvantages. Alongside explanations of potential returns, we must also insist on clear explanations of the associated risks. If something is unclear, we must ask questions repeatedly. This is the most realistic and fair way to protect our own assets while dealing with banks that pursue their own interests above all else.
