[Column] The fate of financial inclusion

Financial inclusion is unfolding in a way few expected. Korea's five major financial holding groups estimate that they supplied about 5.7 trillion won in the first quarter of this year. That is roughly 43% of their annual target, suggesting they could hit it early if the pace continues. Even so, their faces show little relief. Instead, there is a clear sense of unease, because Cheong Wa Dae has called not for simple support but for structural change. Chief Presidential Secretary for Policy Kim Yong-beom has recently published four separate posts criticizing the way the Formal financial system calculates interest rates. His point is that the existing financial sector logic, which makes lower-credit borrowers pay more, needs to be overhauled. In other words, he is asking for a new level of financial inclusion that goes beyond simple social contribution or interest refunds.
The gap in perception between the financial sector and Cheong Wa Dae appears wide. Kim said, "Financial inclusion is not a separate slogan or program. It requires changing the financial structure so that it can respond continuously to continuous risks." In his view, financial inclusion through policy financial institution contributions and similar measures is not enough.
Banks say it is risky to shake up the existing credit order. One banking official said, "Small Business Loan is an area banks cannot easily absorb on their own," adding, "Without links to the Korea Credit Guarantee Fund (KODIT) or Credit Guarantee Foundation, it is simply difficult in practice." Given delinquency rates and business closure rates among sole proprietors, expanding lending to mid- and low-credit borrowers or cutting rates could threaten soundness. And with household loan regulations tightening, the blunt truth is that banks are unlikely to leave safe secured loan products behind in order to extend riskier Unsecured loan products.
If we take reality into account, the answer is not unconditional lending expansion or rate cuts. The key is to identify the "hidden gems" with precision. If banks can accurately assess risk by analyzing thousands of pieces of Alternative data, they can improve access to finance while maintaining soundness at the same time. The financial sector must also acknowledge that old Credit Rating standards have their limits. Rather than getting fixated on financial inclusion performance alone, it is time to ask how seriously it is investing in data infrastructure and Artificial Intelligence (AI) assessment technology. The government, too, should stop relying on the stick of treating banks as quasi-public institutions and instead give them incentives to identify borrowers among mid- and low-credit customers who have both the willingness and the ability to repay their debts.
What is needed now is not loud, self-congratulatory finance. Nor is it a solution to demonize banks and beat them into compliance. The competitiveness of financial inclusion comes not from simply expanding supply, but from the judgment to distinguish sound borrowers even amid risk.
stand@fnnews.com Reporter