Eun Sung-soo Urges Card Companies to "Reform High-Cost Marketing Practices"

Eun Sung-soo, Chairman of the Financial Services Commission (Source=Yonhap News)

[Asia Economy Reporter Kim Hyo-jin] Eun Sung-soo, Chairman of the Financial Services Commission, on the 29th sharply criticized, saying, "The high-cost marketing practices of card companies must be corrected through simultaneous efforts by the industry and authorities."

Jul-tak-dong-si is an idiom meaning that for a chick to hatch from an egg smoothly, the mother hen must peck from outside while the chick pecks from inside, helping each other.

On the same day, Chairman Eun held a meeting with CEOs of the specialized credit finance industry (cards, leases, installment finance, new technology finance, etc.) at the Financial Services Commission's main conference room in the Seoul Government Complex, pointing out that card companies' marketing expenses increase by more than 10% annually.

Chairman Eun mentioned, "In an era of low growth, with low profitability and intensified competition, questions are being raised about whether the current high-cost business structure is sustainable under these unfavorable management conditions."

He also said, "It is time to find new sources of revenue and diversify portfolios as a breakthrough in the difficult management environment."

Chairman Eun then suggested actively utilizing various big data such as card members' consumption expenditure and payment information, and sales information of 2.8 million affiliated merchants owned by card companies to discover new business areas like My Data (personal credit information management), credit evaluation for individual business owners, big data analysis, processing, sales, and consulting services.

He continued, "The specialized credit finance industry, including card companies, must continuously strive to develop more innovative and consumer-friendly new services from the perspective of financial consumers," warning, "Financial companies that fail to achieve new development will be distanced from consumers' choices."

The meeting was attended by Kim Joo-hyun, Chairman of the Credit Finance Association, and CEOs of 15 specialized credit finance companies including card companies. The industry requested amendments to the specialized credit finance laws to provide innovative financial services mentioned by Chairman Eun.

They also proposed easing entry regulations for real estate leasing to strengthen productive financial functions and diversify the portfolios of capital companies, which are heavily focused on auto finance. Currently, only specialized credit finance companies with lease assets (excluding automobiles) exceeding 30% of total assets can engage in real estate leasing.

Additionally, they requested the establishment of fair investment conditions so that new technology finance companies do not face relative disadvantages compared to venture capital companies. They also proposed relaxing leverage ratios to promote new businesses such as card companies' innovative financial services and overseas expansion.

This content was produced with the assistance of AI translation services.