South Korea to make banking sector accessible

The financial regulator of South Korea announced on Wednesday its plans to reduce barriers in the banking sector in order to stimulate competition and foster a more dynamic market.

Chairman Kim Joo-hyun of the Financial Services Commission stated that the government will now accept applications from domestic regional banks to expand their operations into nationwide commercial banks. The authorities will proactively review these applications and consider granting new approvals if the banks demonstrate sufficient financial resources and feasible business plans. Kim emphasised that this move represents the first entry into the commercial bank sector in over 30 years, leading to a significant transformation in competition.

Among the financial groups interested in entering the commercial banking sector is DGB Financial Group’s Daegu Bank, as reported by the media. The sector currently consists of various financial firms, including Woori Financial Group, Hana Financial Group, KB Financial Group, and Shinhan Financial Group.

Additionally, the South Korean government plans to explore the possibility of introducing more online lenders, expanding beyond the existing Kakaobank and Kbank. Chairman Kim highlighted the need to enhance competition and innovation in the banking industry.

This initiative comes as a response to President Yoon Suk Yeol’s call for measures to address rising costs faced by vulnerable individuals. By fostering competition, the government aims to mitigate these challenges and create a more accessible financial environment.

Following the announcement, the Korea Exchange Bank Equity Index experienced a 1% decline, compared to the broader market’s 0.4% loss.