[The Crisis of Korean Finance] Financial CEO: "Corporate and Household Debt Are Default Time Bombs... Unprecedented Crisis"

Survey of Major Financial Holding Chairmen and Bank Presidents
"Market Volatility Increases, Worst Crisis to Come"

The financial industry in 2020 stands at a crossroads of significant change. After several years of unprecedented prosperity, it now faces a critical test directly linked to survival. The spread of the novel coronavirus infection (COVID-19) has brought about a crisis not only to the domestic market but also to global finance. There are forecasts that the survival of domestic financial companies will be determined by how they overcome this challenge. Additionally, with big tech companies such as Naver and Kakao entering the financial industry backed by advanced technology, existing financial firms are expected to face unprecedented moments of crisis and challenge. Asia Economy diagnoses the problems of the Korean financial industry as perceived by domestic financial company CEOs and the solutions to overcome sector-specific crises in a five-part series.

[Asia Economy Reporter Kangwook Cho] CEOs of domestic financial companies identified the adverse impact of the real economy downturn caused by the COVID-19 pandemic on the financial system as the greatest risk. They unanimously agreed that with the economic recession and ultra-low interest rates, financial market volatility will increase, creating the most challenging environment in history.

According to a survey conducted by Asia Economy on the 17th among chairpersons and bank presidents of major domestic financial holding companies, most CEOs pointed to the deterioration of corporate and household loans due to economic growth stagnation after COVID-19 as a potential time bomb threatening the future of the Korean financial industry. This is because current government policy loans and financial support only delay the timing of defaults and cannot provide a fundamental solution.

Intensified competition with ICT companies was also seen as the biggest future threat to the financial industry. On the other hand, some opinions suggested that digital innovation could be both a crisis and an opportunity to design new business areas on top of platforms.

CEOs unanimously stated that for the domestic financial industry to develop, efforts should focus on qualitative growth and improving growth-limiting factors. They especially emphasized that deregulation hindering the development of the financial industry must precede. They called for refraining from applying rigid capital market laws and shifting supervisory systems to focus on prior supervision and advisory roles, thereby eliminating regulations that hinder growth. There were also calls to minimize government intervention in the financial industry.

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