[Bank President 2022 Outlook] Unified Call for Regulatory Reform... "Regulatory Fairness vs. Strengthening Digital Finance"

Survey on Next Year's Financial Market Outlook by 12 Major Bank CEOs
Unified Voice on Regulatory Improvement... Divergent Views on Details
Emphasis on Fairness of Regulations Between Commercial and Regional Banks
Calls for Supplementary Measures for Internet and Foreign Digital Finance

[Asia Economy Reporter Kiho Sung] As the establishment of a new government is anticipated following next year’s presidential election, heads of domestic banks have emphasized the need for comprehensive regulatory reform. Considering the prolonged COVID-19 pandemic and unstable market conditions, there is a growing call for strengthening the domestic financial industry’s structure through regulatory reform. However, differing views among leaders of commercial banks, internet-only banks, and regional banks highlight the urgency for discussions involving the government, industry, and academia.

On the 13th, Asia Economy conducted a survey on the ‘2022 Financial Market Outlook’ targeting 12 CEOs from domestic commercial, regional, internet-only, and foreign banks, all of whom unanimously agreed on the necessity to eliminate outdated regulations.

Most commercial bank CEOs diagnosed that ‘regulatory fairness’ is paramount amid the expanding influence of big tech companies. NH Nonghyup Bank CEO Junhak Kwon stated, “From the perspective of financial firms, the demand for ‘same function, same regulation’ may seem like the tyranny of vested interests, so we approach it cautiously. However, to ease the growing antagonism between financial firms and tech companies within the financial market, it is necessary to clarify roles within the conceptualized market, which calls for applying the same function, same regulation principle to tech companies.” He emphasized that the same regulations should apply when tech companies enter the financial market.

Hana Bank CEO Sungho Park also proposed, “To activate fintech investment, the Fintech Promotion Support Act should include specific and clear provisions regarding the scope of investment targets.” He added, “While big tech companies are generally unrestricted in sectors they can control, banks play an important role regarding fintech firms, yet there are no explicit legal regulations. More precise regulations are needed.”

Regional bank CEOs demanded equal regulations with commercial banks. In particular, they agreed on the need to improve the current system that requires regional banks to allocate over 60% of new loans to small and medium-sized enterprises (SMEs). DGB Daegu Bank CEO Sunghoon Lim said, “The ‘60% SME rule’ excludes commercial banks but still operates according to the founding purpose of regional banks from about 50 years ago. The differing regulations between commercial and regional banks are somewhat disconnected from reality.”

BNK Gyeongnam Bank CEO Hongyoung Choi emphasized fairness in marketing. CEO Choi stated, “Commercial banks are aggressively marketing to local governments and public institutions within regions, but since the funding costs differ between commercial and regional banks, regional banks inevitably fall behind in interest rate competition. It is necessary to institutionalize advantages for regional banks when designating depositories by reflecting non-financial indicators such as regional reinvestment performance and various convenience facilities.”

Internet-only banks highlighted the need to foster digital finance. They pointed out that global competitiveness in digital finance must be a prerequisite to protect the domestic market. Kakao Bank CEO Hoyoung Yoon said, “Support must be provided for financial market stabilization and protection of financially marginalized groups. Balanced regulations that can empower research and development for digital innovation and global competitiveness of Korea’s financial industry are essential.”

Heads of foreign banks advised that the domestic financial market should hasten preparations for opening in line with global standards. One foreign bank CEO noted, “With the expansion of cloud transition policies, domestic financial institutions have become more flexible in using cloud services. However, despite global financial institutions having their own systems to ensure stability, they face restrictions on using overseas-based strategic cloud platforms due to various regulations.” He continued, “We propose easing related regulations to allow all financial institutions wishing to implement service mesh strategies to process cloud information on equal terms by permitting the use of overseas-based cloud platforms.”

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