Chairman Park Jong-soo of the Korea Financial Investment Association (KFIA)

Chairman Park Jong-soo of the Korea Financial Investment Association (KFIA) said in his New Year’s statement that the economy is expected to improve this year, but the financial environment would not likely favor the financial industry as the flow of new funds into the industry would remain slow and intense competition resulting in lower fees due mainly to structural reasons and not worsened conditions.

“As crises sometimes become opportunities, if we don’t avoid them and fight them with reforms, there should be new opportunities emerging,” Park said. 

“KFIA will try to expand the demand base for funds for the financial market this year, as the basic problem facing the financial market has been that not enough funds have been flowing into it. The weak demand base for the financial market has not only been a big problem for the industry, but also a risk factor for the national economy.

“In order to take care of the pressing problems at hand, such as the supply of funds to the newly emerging industries, along with the asset management systems for the aged people to effectively manage their post-retirement lives, the demand for investments in the financial market has to back them up.

“Retirement funds and private retirement assets should be introduced into the financial market to build a base for a strong financial nation like the United States and Australia. We should reform the retirement fund management systems to help retirees prepare for their retirement lives past 100 years of age through a circulation of funds from private welfare to the government treasury and capital market. We ought to spur the private equity funds to supply risky funds for dynamism in the financial market,” the chairman said.

“The consumer’s needs have been drastically changed due to the era of an aging population and low-interest rates, and the development of new commodities and asset management services have become necessary now more than ever to cope with the new demands.

“We have to expand the retirement preparation service and develop medium-risk and medium-earnings products and have more excellent businesses on the stock market to provide stable income for retirees. We also have to make competition more intense among prime brokerages and other new investment banking firms in providing credit to corporate customers.

“We also have to change ourselves so that we can have large eyes to see what our future holds and withstand any pains that come with reform.

“We also have to expand our overseas operations in order to be a leader of Asian finance like global investment banks and asset management firms that grew immensely by entering markets for their respective business areas. Financial firms in China and Malaysia, among others, have been following Japan and Australia in tackling the global financial market. We must enter the global financial market for further growth since the domestic financial market is limited. Detailed plans are needed to enter the Asian financial market first through combined efforts of government, corporations, and retirement funds to kick off our global operations.

“As we painstakingly learned last year, the financial markets cannot survive without customer trust, thus we have to strengthen the monitoring for the marketing process for the capital markets and tighten our internal regulation to win back the customers’ trust.

“In order to do that, we have to improve our customer protection by strengthening internal compliance regulations and introducing a fund supermarket that is customer-centered to boost our customer protection to the levels of advanced countries,” Park urged.