South Korea’s top financial regulator has vowed to eliminate regulatory hurdles and outdated rules that hinder local financial companies from rolling out innovative services.

“The year 2021 is a crucial time for the country as we need to overcome the economic fallout from COVID-19 and carry out future strategies for taking a lead in the post-COVID era,” Financial Services Commission Vice Chairman Doh Kyu-sang said during an online meeting on the future outlook and competitiveness of the financial industry, convened by financial experts at the nation’s leading research institutions and financial companies.

“(The FSC) will review whether its monetary penalties levied on financial firms for late filing of business report are posing a setback to corporate management and innovation in a bid to improve them in the coming years.”

In addition, Doh promised to overhaul the business authorization scheme that currently suspends the granting of new business licenses to financial firms involved in a lawsuit or under the authorities’ investigation. 

“Hoping to foster innovative growth in the finance industry this year, (the FSC) will continue to iron out measures to accelerate deregulation efforts,” he added. 

Meanwhile, he urged financial companies to prompt expansion of digital financial services in the midst of a fourth industrial revolution accelerated by the virus-driven contactless boom. 

During the meeting, financial professionals predicted that rising competition between traditional financial institutions and fintech or Big Tech rivals, as well as ESG management, would be major industry trends for 2021, stressing the importance of financial policies reflecting rapid changes in finance environment. 

“This year, competition between traditional lenders and fintech or Big Tech firms over a customer base is expected to become fiercer,” said Kim Yun-goo, managing director and partner at the Boston Consulting Group Korea.

Big Tech refers to the country’s IT giants -- namely Naver and Kakao -- which have been offering online financial services based on consumer data on their e-commerce platforms.

“In terms of fairness, emerging Big Tech companies should also fall under the FSC’s regulations imposed on traditional financial institutions,” she said.

“The outlook for the local financial industry doesn’t look very promising, mainly due to the prolonged low-rate environment and slowing profits due to the pandemic,“ said Jeong Joong-ho, executive director at the Hana Institute of Finance.

”The financial authorities need to come up with policies in a way to promote the industry’s sustainable growth, including a policy framework on expanding ESG (environment, social responsibility and governance) management in financial circles.“

By Choi Jae-hee (cjh@heraldcorp.com)