Lee Bok-hyun: "More Competition Needed Among Banks... Efforts for Coexistence Also Insufficient"

Mention of Strengthening Internet Bank Competitiveness
Expert: "Various Specialized Models Must Be Considered"

[Image source=Yonhap News]

[Asia Economy Reporter Kwon Hyun-ji] Lee Bok-hyun, Governor of the Financial Supervisory Service, criticized the oligopoly system centered on large banks, stating that more competition is needed. He also urged for greater efforts toward coexistence that meet the public’s expectations.

On the 23rd, after the “On-site Meeting between Financial Consumers and Experts for Expanding Coexistence Finance” held at the Hana Bank headquarters in Jung-gu, Seoul, Governor Lee told reporters, “There are areas that need improvement for banks to compete more, so I will keep an eye on them,” adding, “We will keep various possibilities open and discuss measures to enhance the competitiveness of internet banks or address concerns that internet banks are following the ‘Big Tech’ unique methods too closely.”

Experts also pointed out the oligopoly system at the meeting. Lee Hyo-seop, Director of the Capital Market Research Institute, said, “In fact, in the oligopoly system, rather than observing competition in loan-deposit margin, when the Bank of Korea raises the base interest rate, banks quickly raise loan interest rates one after another but increase deposit interest rates very slowly,” criticizing the situation. He added, “Internet-only banks, introduced to improve these problems, initially seemed to play the role of a ‘catfish,’ but now it is necessary to diagnose whether they have become sharks or even whales instead of catfish.”

Suggestions for improving the oligopoly system were also abundant. Director Lee proposed, “It is necessary to review various specialized models such as the digital-based Grameen Bank being considered by Seoul City, the Silicon Valley Bank in the U.S., which rapidly grew by providing loans to small innovative venture companies, Japan’s trust banks specialized in asset management services for the elderly, Europe’s digital-based foreign exchange specialized banks, and intangible asset-based IP finance (intellectual property finance) specialized banks.” He continued, “Allowing small licenses or specialized banking to different industries such as securities and insurance might also be a method.”

When pointed out that more efforts for coexistence finance are needed in the banking sector, Governor Lee agreed. He explained, “Only 5 to 10% of banks’ interest income returns to consumers, so we need to consider whether it is because banks lack the willingness to share or if it is a problem of the system,” adding, “Rather than excessive institutional changes, voluntary institutional improvement efforts by banks are necessary.”

Regarding the background of holding the meeting, he said, “Seeing that banks can continue to earn excess profits amounting to hundreds of billions to trillions of won, it can only be seen that this intention has not been conveyed in organizational decision-making,” and honestly added, “I also hoped that the financial authorities and the public would listen together to where the more fundamental causes lie.”

On the controversy over government-controlled finance, he drew a clear line, saying, “I have no intention of imposing government control such as telling specific banks or financial institutions ‘where to lend’ or ‘what kind of actions to take,’” and added, “I will focus on systemic considerations.”

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