Kim Yong-bum Proposes Three Fixes to Make South Korea’s Financial System More Inclusive

Kim Yong-bum, policy chief at the presidential office, on Saturday proposed three steps to overhaul a financial system he said disadvantages vulnerable groups: strengthening banks’ accountability, improving credit evaluation and redefining the role of lenders focused on low-income borrowers.
 
Kim laid out the proposals in a Facebook post titled “How to reconnect a broken market: Designing finance to connect again.”
 
Referring to two earlier posts criticizing the financial system, Kim said he was not calling for “irresponsible debt forgiveness” or for undermining the credit order. He said the goal was to examine how the current system works and “which segments are being abandoned.”
 
On access to finance for mid- to low-credit borrowers, Kim said the priority is changing a structure in which banks view “avoidance” as a rational choice. He was referring to banks turning away borrowers who can repay, based on existing credit-rating standards.
 
“When finance fears that point and only retreats, what fills the gap is illegal private lending and despair,” Kim wrote. “We have to change this game,” he said, arguing that household lending should not remain confined to the “safe greenhouse” of high-credit borrowers and that the composition of lending needs to shift.
 
Kim also called for expanding what he described as an outdated “frame” for credit scoring. “How long will we keep looking only at past delinquency records or card histories?” he wrote, adding that a lack of financial history does not mean a person lacks the ability to repay.
 
He said the role of institutions providing finance to low-income households should be “reorganized from the beginning.” Kim said the government has provided tax exemptions and support, but in practice the structure has led to more deposits at central federations than loans to members. He added that existing institutions operate on the basis of “relationships among people who know each other.”
 
With labor more mobile, income more dispersed and people more spread out, Kim said what is needed is not simply expanded support but adjustments to the model.
 
Kim said all of his proposals point to one goal: reconnecting broken parts of the market and filling gaps that have been left unattended. He said that raises questions about the role of financial authorities, arguing that inclusive finance is not a separate slogan or program but should come from redesigning the system to respond continuously to ongoing risks and reconnect severed segments.
 
“This is the starting point for moving beyond an era of cruel finance to connected finance,” he wrote.