The number of bank branches and representative offices also hit the skids last year as more clients resorted to automated teller machines (ATMs) and cash dispensers (CDs) instead of visiting windows in person.

As of end-2016, local banks had a combined 7,103 branches and offices across the nation, down 175 from the previous year. It was the biggest on-year fall since 2002, when authorities began to compile related data.

The number of ATMs and CDs came to 48,474 as of the end of last year, down 2,641 from a year earlier and the sharpest drop since 2003.

Local banks' downsizing drive stemmed mainly from customers' heavy reliance on mobile and Internet banking.

According to the Bank of Korea, nearly 81 percent of all bank inquiries were carried out through mobile and Internet banking in December, the highest ratio since 2005, when the central bank started to track such data.

Market watchers expected the banking industry's downsizing drive to gather further steam down the road as they are likely to focus more on mobile banking and ramp up efforts to reduce operations.

Some banks are striving to encourage more clients to use mobile banking and plan to allow customers to withdraw cash at convenience stores across the nation.

Other lenders are poised to introduce flexible working hours and two-shift systems while setting up small-scale, self-service offices in keeping with the falling workforce, according to sources. (Yonhap)