Starting July 20, customers can compare and apply for loans from 4 major banks at 20 post offices nationwide

An English-language logo hangs at the entrance of a post office. [Herald DB]

Starting July 20, residents will be able to consult on and apply for loan products from four major banks — KB Kookmin, Shinhan, Hana and Woori — at 20 general post offices across the country. The move in effect turns post offices into offline loan-comparison platforms and is expected to improve financial access for people in underserved areas.

Financial Services Commission Chairman Lee Eok-won announced the measures Thursday at the 6th Inclusive Finance Transformation Conference and Regional Finance Forum, held at the North Jeolla Small and Medium Venture Business Agency in Jeonju, North Jeolla Province. It was the first time the FSC held an inclusive finance transformation conference outside Seoul.

"The strength of regional finance lies in its closeness to local communities," Lee said. "Only by accurately understanding and assessing the characteristics of a region and the growth potential of its businesses can we create a virtuous cycle in which needed funds are supplied on time and flow into local investment and growth."

He added that the government had been pursuing preferential financial support for regional areas as a core task of the finance transformation initiative. "We will now also push forward with everyday finance policies that residents, small and medium-sized enterprises, and small business owners can feel in their daily lives," he said.

Korea Post will formally launch a pilot banking-agency program at 20 general post offices in North Gyeongsang Province, South Gyeongsang Province, the Chungcheong provinces, Gangwon Province, North Jeolla Province and South Jeolla Province. Residents who have difficulty visiting a bank branch will be able to consult on and apply for eight loan products from the four banks at a nearby post office, compare screening results and proceed through to a loan agreement.

The service will launch with unsecured personal loans first, with the range of available products to be expanded over time. In keeping with the spirit of inclusive finance, each bank will also offer customers who take out loans through the banking-agency channel a preferential interest rate averaging 0.2 percentage points lower than standard rates.

FSC Chairman Lee Eok-won (front row, sixth from left) poses for a photo with key attendees before presiding over the 6th Inclusive Finance Transformation Conference and Regional Finance Forum at the North Jeolla Small and Medium Venture Business Agency in Jeonju, North Jeolla Province, on Thursday. [FSC]

Next year, joint loan products developed through collaboration between regional banks and internet banks are also set to launch in earnest.

Under the joint loan model, internet banks will recruit borrowers — including small and medium-sized enterprises and small business owners — through their mobile apps, while regional banks and internet banks share responsibility for screening and funding. Once a loan is approved, the two institutions split the loan amount at a set ratio.

The aim is to combine internet banks' strong advertising and customer-acquisition capabilities with regional banks' expertise in assessing credit for local SMEs and sole proprietors. Regional SMEs and small business owners are expected to borrow conveniently at interest rates at least 0.3 percentage points lower than they would otherwise receive.

The FSC plans to review this month whether to designate the regional bank–internet bank joint loan project as an innovative financial service, and will support its rapid launch next year following system development and other preparatory steps.

In the insurance sector, as a follow-up to a mutual-aid insurance MOU signed with North Jeolla Province last year, comprehensive insurance for small business owners — covering personal injury and fire, among other risks — is set to be provided free of charge next month.

The mutual-aid insurance program also plans to concentrate more than 5 billion won ($3.31 million) in support for vulnerable elderly groups, including by providing free personal injury insurance and healthcare packages to recipients of the customized elderly care service. The program will also seek to boost its effectiveness by expanding coverage for those vulnerable to megatrends — demographic change, climate and technology — and by linking with policy finance.

Local governments and public institutions that have completed consultations will pursue MOU agreements with the insurance sector starting in the third quarter of this year, with revamped insurance products set to launch in the first quarter of next year.

At the forum Thursday, NH NongHyup Financial Group announced it would supply a total of 15.3 trillion won in inclusive finance to small business owners and vulnerable groups over the next five years, concentrating 6.8 trillion won of that on support for low-income households and the financially vulnerable. The group also plans to establish the NH Miso Finance Foundation with total assets of 100 billion won in the fourth quarter of this year.

The FSC said it would review with relevant agencies the proposals raised at the forum, including expanding the operating scope and product range of the banking-agency service, strengthening financial counseling systems for local small business owners, easing the loan-to-deposit ratio regulations on policy microfinance, and rationalizing the risk weighting on refinancing loans for small businesses handled by the Small Enterprise and Market Service.

ehkim@heraldcorp.com