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South Korea Agrees To Lower Banking Barriers For The First Time In 30 Years

By  |  July 5, 2023

South Korea has launched a major expansion of its banking sector, currently dominated by just five lenders.

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    The country’s Financial Services Commission (FSC) announced Wednesday (July 5) that it will permit more online banks, allow regional banks to expand their operations, and — for the first time in 30 years — greenlight the establishment of a new nationwide bank.

    “Due to the oligopolistic nature of the banking industry, there has been a widely-held view among the public that banks are reluctant to make changes despite their easy profitmaking structure,” the FSC said in a news release.

    “Therefore, the main purpose of the reform measures prepared by the taskforce is to promote fair and effective competition in the banking sector — but more importantly, competition driven by market forces.”

    Read more: KFTC To Decide South Korea Mirae Asset Fines Over Intra-Unit Trading

    The FSC says it also wants to help FinTechs and nonbank financial institutions compete with banks, and plans to “promote savings banks’ M&A activities to bolster their competitiveness and to boost competition in the deposit and loan markets.”

    This is happening at a time when, as covered here last month, banks and FinTechs are increasingly depending on each other for data sharing and compliance to help meet the needs of digitally native consumers.