Lee Ok-won, the Chairman of the Financial Services Commission, announced plans to launch an 'Inclusive Finance Strategy Promotion Team' next month. The discussions will include appointing a 'Chief Officer for Inclusive Finance' within financial institutions, improving credit evaluation methods, rationalizing soundness regulations, and strengthening management of delinquent debts. This initiative aims to directly address issues related to long-term delinquent debt collection and financial exclusion, particularly in light of the recent Sangnok-su incident. The direction is correct, but the key lies in execution rather than mere declaration.
Finance is not just an industry that lends money and collects interest. It is the lifeblood of capitalism, a ladder for individuals to rise again, and fuel for corporate growth. When finance operates correctly, capital flows to productive areas. Conversely, when finance is distorted, money concentrates in real estate and short-term profits, leaving those who have failed without a chance to recover.
Historically, finance has evolved alongside the growth of civilization. The banking industry in medieval Italy fostered the growth of commercial cities, and the Industrial Revolution was impossible without long-term capital supply. The United States' position at the center of the global economy is rooted in the dollar system and deep capital markets. Finance has always been an institution that invests in trust and future possibilities.
However, South Korean finance has long been overly focused on stability and soundness. While the stability of the financial system is important, an excessive emphasis on stability can turn finance into an organization that avoids risks rather than one that creates new opportunities. A history of delinquency makes it difficult to recover, and without collateral, obtaining startup funds becomes challenging. When finance only considers past failures rather than a person's potential, inclusivity disappears.
The issues raised by the Sangnok-su incident highlight this problem. Long-term delinquent debts are traded at rock-bottom prices, and debtors face prolonged collection pressures. While this may make sense from the perspective of financial companies seeking to recover debts, it ultimately reduces the potential for consumption and recovery across society. If finance is perceived as a system that pushes people to the brink rather than one that saves them, trust in the market economy erodes.
Globally, financial inclusion is also a significant policy challenge. The Community Reinvestment Act (CRA) in the United States encourages banks to meet the credit needs of low- and moderate-income communities in their service areas. In the UK, Big Society Capital was established as a wholesale investment institution to grow the social investment market. These examples underscore the view of finance as a social infrastructure rather than merely a profit-driven industry.
However, inclusive finance must not devolve into welfare finance. The foundation of finance is credit and responsibility. Ignoring risks in support ultimately leads to insolvency and moral hazard. The real challenge is to reduce financial exclusion while maintaining market principles. This requires a change in credit evaluation. The structure that brands a single failure as a lifelong stigma must be corrected. Various data, such as telecommunications payment history, income flow, business sustainability, and platform transaction history, should be utilized to assess a person's recovery potential.
The plan to reflect inclusive finance in the governance of financial companies is also significant. Banks and financial holding companies are not merely private enterprises; they operate based on public trust and national deposits. Therefore, they bear a higher social responsibility. However, responsibility alone should not be imposed. To sustain inclusive finance, financial institutions need an incentive structure that balances profitability and soundness.
At the national level, inclusive finance should not be confined to support policies for the underprivileged. It must be a growth strategy. Funding should flow into youth entrepreneurship, local economies, second-chance businesses, and new industries. The strength of Silicon Valley emerged from a financial ecosystem that tolerates failure. For the South Korean economy to overcome low growth and population decline, finance must shift from a collateral-centric approach to one focused on potential.
From an industrial perspective, the flow of money must change. Finance that remains focused on real estate and stable interest margins cannot nurture future industries. Long-term capital and venture capital are needed in fields such as AI, biotechnology, aerospace, and energy transition. Inclusive finance is not only about helping vulnerable groups but also about broadening the foundation for new growth.
At the corporate level, financial companies should view customers not merely as risk subjects but as long-term partners. Inclusive finance is an investment in creating future customers, not a cost. Only financial institutions that earn social trust will survive in the long run.
The conclusion is clear. Finance should be a cycle, not a predation. It should be about recovery, not exclusion. It must invest in future possibilities, not just short-term profits. This new promotion team must not become a mere showpiece. The nation, industry, and corporations must all reaffirm the purpose of finance. When money flows towards people, businesses, and the future rather than chasing only profit, South Korean finance can finally restore trust.
* This article has been translated by AI.
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