As the Financial Services Commission (FSC) pushes to introduce a chief executive overseeing inclusive finance, complaints are emerging in the industry that the move amounts to "excessive interference." While companies agree with the broad goal of expanding inclusive finance, they argue that forcing the creation of a dedicated independent executive position for a specific policy objective goes too far.
The FSC held a meeting of the financial industry subcommittee under the Inclusive Finance Strategy Task Force at the Bank Hall in Seoul on Monday, discussing measures to resolve interest-rate cliffs and to improve soundness regulations to expand the supply of inclusive finance.
The FSC set the adoption of a chief inclusive finance officer (CIFO) as a key task of the task force. The aim is to place a dedicated inclusive finance executive at each financial firm so that businesses such as funding mid- and low-credit borrowers and debt restructuring do not end as one-off efforts but become permanent management goals. A task force official said, "The FSC appears to have the intention of reflecting the CIFO adoption in the Act on Corporate Governance of Financial Companies," adding that "related discussions are set to proceed in September."
The financial sector is questioning the effectiveness of adopting a CIFO. Dedicated systems are already in place, and the effect of establishing a CIFO may not be significant. Shinhan Financial Group has formed an inclusive finance division centered on a secretariat led by its chief strategy officer (CSO). BNK Financial Group operates an inclusive finance support unit to carry out related businesses.
There are few overseas cases of executives dedicated to inclusive finance. HSBC UK operates an "inclusive finance and vulnerable groups" position, but major U.S. banks such as JPMorgan Chase, Citigroup and Wells Fargo have no separate executive. The same is true of Japan's Mitsubishi UFJ Financial Group (MUFG). A financial industry official explained, "Unless it is an organization dedicated to inclusive finance, in many cases an executive in charge of environmental, social and governance (ESG) or regional finance also handles inclusive finance together."
Critics also raise concerns that requiring private financial firms to create a new executive position to achieve policy goals could spark controversy over government intervention in the sector. Some point out that at this rate, dedicated executives would have to be placed in every necessary area, including productive finance, artificial intelligence transformation (AX) and voice phishing prevention.
Some also note that in that case, a laughable situation could arise where the executive and organization names must be changed whenever the government changes. In fact, each administration has put programs such as Smile Microcredit, Livelihood Finance and Inclusive Finance at the forefront. Debt restructuring programs for vulnerable groups have also been implemented under changing names, such as the National Happiness Fund, the Fresh Start Fund and the New Leap Fund. A financial holding company official said, "Unlike a compliance officer or a chief risk officer (CRO), inclusive finance is work that can be handled within the current organizational structure," adding, "With each financial firm already working to expand inclusive finance, the change that can be made by appointing a single executive will not be significant."
