Seoul City Councilor Kim Jeong-tae's Representative Proposal 'Seoul Financial Industry Promotion Ordinance' Enforced... Support and Foster Innovative Financial Services Emerging from ICT Development and Mobile Expansion
[Asia Economy Reporter Jong-il Park] The Yeouido Seoul Financial Hub is set to be actively developed as a mecca for the innovative financial services industry.
On the 16th, Seoul City Council member Kim Jeong-tae (Democratic Party, Yeongdeungpo District 2) announced that the amendment to the ‘Seoul Financial Industry Promotion Ordinance,’ aimed at revitalizing the stagnant Seoul financial hub and actively fostering Yeouido as an international financial hub, has been promulgated.
The ordinance, passed by the Seoul City Council on the 30th of last month, defines innovative financial services, supports overseas expansion and investment attraction for innovative financial services, and includes provisions for the creation and operation of facilities to revitalize the financial hub to attract domestic and foreign financial institutions.
The Yeouido area was designated as the Seoul Financial Hub for the development of a Northeast Asia financial hub in January 2009. However, its international evaluation and recognition have continuously declined, ranking 14th in the Global Financial Centres Index (GFCI) in 2016 and dropping to 36th in 2019.
Moreover, public financial institutions such as the Korea Exchange, Korea Housing Finance Corporation, and Korea Securities Depository have relocated to Busan as part of the public institution relocation plan. Additionally, 23 foreign financial institutions withdrew over three years starting in 2017, while only 17 entered, leading to a contraction of its function as an international financial hub.
The newly promulgated amendment to the ‘Seoul Financial Industry Promotion Ordinance,’ which was primarily proposed by Council member Kim, aims to enhance the international competitiveness of the Yeouido financial hub through startup support for innovative financial service industries such as fintech.
According to the amended ordinance, innovative financial services are defined as ‘new financial services resulting from the convergence of finance and IT (Fin-Tech) in the Fourth Industrial Revolution.’ The support targets are those intending to start small and medium-sized enterprises (SMEs) in the innovative financial services sector and SMEs less than seven years old. Last year, the Financial Services Commission designated a total of 37 cases as innovative financial services.
Furthermore, to revitalize the Yeouido financial hub, the ordinance provides for the establishment of facilities to attract domestic and foreign financial institutions, a network hub for financial workers, and the installation of the Yeouido Financial Base Seoul Office. It also allows for administrative and financial support for the Seoul Graduate School of Finance, whose establishment has been confirmed.
Council member Kim stated, “It has been 10 years since Yeouido was designated as a financial hub, but its international evaluation and recognition as a domestic financial center have dropped from 6th place in 2015 to 36th in 2019.” He added that through fostering rapidly spreading innovative financial services, they will develop Yeouido into an Asian financial hub, which is the purpose of nurturing the financial center.
Seoul City also plans to develop and foster Yeouido as Asia’s top global financial hub by nurturing the fintech industry, a new financial industry, through the ordinance amendment.
Accordingly, Seoul City will invest a total of 7.2 billion KRW this year to intensively nurture fintech companies and plans to support the Seoul Graduate School of Finance with a total of 19 billion KRW by 2023.
According to the German market research firm Statista Report, the global fintech transaction amount is expected to increase from 3.6356 trillion USD in 2017 to 9.824 trillion USD in 2023. Due to ICT development and the rapid spread of mobile technology, fintech is emerging as an innovative alternative in the financial industry.
Therefore, the amendment, which induces the emergence of innovative financial services and supports their growth and development, is expected to receive a positive response from the industry.
Council member Kim Jeong-tae said, “The Seoul Graduate School of Finance, operated by KAIST, will open in the second half of this year,” adding, “We will focus on nurturing digital finance professionals who will lead the new financial industry in the post-COVID-19 era so that Seoul can achieve the grand vision of becoming a Northeast Asia financial hub.”
He also emphasized, “To strengthen the global competitiveness of the Yeouido financial hub, policy changes and innovation are necessary,” and called for “active support from Seoul City and Yeongdeungpo to improve the financial industry’s business environment.”
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