Eun Seong-su: "Doubtful if Traditional Financial Firm Revenue Models Will Apply... Need to Change Survival Methods"

Eun Sung-soo, Chairman of the Financial Services Commission

[Asia Economy Reporter Kim Hyo-jin] Eun Sung-soo, Chairman of the Financial Services Commission, stated on the 11th, "It is questionable whether the traditional profit models of financial companies can be applied in an unprecedented ultra-low interest rate era."

Chairman Eun made this remark during his opening speech at the Financial Development Council (FDC) held at the Korea Deposit Insurance Corporation auditorium in Jung-gu, Seoul. He emphasized, "We need to gather wisdom on how the survival methods of financial companies, which have been sustained by interest rate spreads and asset management yields, should change, and how supervisory methods should evolve in this situation." The full FDC meeting was attended by Chairman Eun, FDC members, the chairman of the Financial Ombudsman Committee, and heads of financial research institutes to discuss 'Financial Policy Tasks in the Post-COVID-19 Era.'

Regarding support related to the novel coronavirus disease (COVID-19), Chairman Eun stated that various financial regulations are being temporarily relaxed. He added, "After COVID-19, it will be necessary to normalize these temporary measures."

He pointed out, "During the normalization process, the burden on economic agents will inevitably increase," noting that "companies and households will have to repay loans, and the compliance costs for financial companies will also rise."

He also mentioned that it is a time requiring proactive consideration of the timing, speed, and method of normalization. Chairman Eun stressed, "In particular, we need to discuss how to minimize the inevitable burdens arising during the normalization process and prepare accordingly."

Regarding the accelerating trend of non-face-to-face and digital innovation, he analyzed that while financial companies are becoming agents of innovation, non-financial companies such as big tech firms are leading innovation and entering the center of finance. He said, "Previously, competition mainly occurred within or between financial sectors such as banking, securities, and insurance, but now competition between the financial industry and big tech is prominent," adding, "It is necessary to seriously consider the threats and opportunities that digital innovation brings to finance and make efforts to find solutions."

Chairman Eun emphasized, "The role of finance in selecting competitive companies in future growth areas with comparative advantages and supporting innovation and challenges remains important."

He believes that the important direction for the financial sector going forward is to shift from 'past-oriented finance,' which evaluates what companies currently have, to 'future-oriented finance,' which assesses what they can have in the future.

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