[Manbo Jeongdam] "Sandwich Regional Banks... Must Specialize Rooted in Local Communities to Survive"

Interview with Bindaein, Chairman of BNK Financial Group

"Until now, we have focused on transactions with small and medium-sized manufacturing companies related to ships and automobiles, but I believe we need to move toward specializing in fields such as marine, logistics, film, and digital in the future. That will be the survival strategy for regional banks caught in a 'sandwich' position between commercial banks and internet-only banks."

On the afternoon of the 24th of last month, at the waterfront park in the Bukhang Redevelopment District located in Choryang-dong, Dong-gu, Busan Metropolitan City, BNK Financial Group Chairman Bin Dae-in met and spoke about the future of regional banks and regional financial holding companies, saying, "While firmly rooting ourselves in Busan, Ulsan, and Gyeongnam (PK), we must develop competitiveness in certain sectors comparable to commercial banks and internet-only banks."

The waterfront park in the Bukhang Redevelopment District, where Chairman Bin walked that day, is about 4.9 km away by distance and approximately 1 hour and 20 minutes by time from the BNK Financial Group headquarters (Munhyeon-dong, Nam-gu), where he works. Since most of the area, except for the international passenger terminal and the waterfront park, is still under construction, it is not an ideal place for walking exercise, but Chairman Bin said he chose this location because it will be the foundation for the future development of Busan's marine tourism and marine industry.

In fact, Chairman Bin, a leader in the PK region's financial industry, tries not to miss at least 'walking' despite his busy schedule where every second counts. Right after the interview, he had a series of meetings and reports scheduled, including the subsidiary CEO candidate recommendation committee meeting. Also, on the weekend, he had already booked a ticket to Paris to support the bid for the 2030 Expo, which was just four days away at that time.

Chairman Bin is regarded as a self-made figure in the local financial community. Born in 1960 in Namhae-gun, Gyeongnam, he graduated from Dongnae Horticultural High School and Kyungsung University Law Department, starting as a new employee at Busan Bank in 1988 at the age of 28, eventually rising to bank president and chairman of the financial holding company. He was a latecomer employee and had the handicap of not belonging to either of the two major academic networks within BNK Financial (Busan Commercial High School and Dong-A University).

- How do you usually manage your health?

▲ Honestly, I hardly manage it. (laughs) Considering that, my health is not bad, which I am truly grateful to my parents for. Unlike bank presidents who must work hands-on, I thought the chairman would have more leisure to think on a bigger scale, but that was not the case. Therefore, I try to practice walking as much as possible in daily life.

For example, when I have lunch in Seomyeon, I walk to the company. The distance from Seomyeon (Bujeon-dong, Busanjin-gu), Busan's largest downtown and financial center, to BNK Financial Group headquarters (Munhyeon-dong, Nam-gu) is about 2 km, taking about 30 minutes. At an average adult male's pace, that is about 3,000 steps.

BNK Financial Group Chairman Bin Dae-in is walking in Busan Bukhang Waterfront Park on the 24th. Photo by Jin-Hyung Kang aymsdream@

- What led you to become a banker?

▲ In some ways, I became a banker partly by my own will and partly by circumstances. At that time, bank recruitment was not fully open but mostly limited recruitment. So, the bank received recommendation letters from schools, and since I was a priority candidate, I decided after some consideration. I had some regrets about not pursuing civil service exams or further studies, but I chose Busan Bank because it was stable and close to my hometown as the eldest son.

- Did you have any regrets?

▲ When I actually came to the bank, I realized I had unfavorable conditions to grow within the organization as a banker. (laughs) I was older, not from a commercial high school (Busan Commercial High School), and my school was not mainstream (like Dong-A University). Rather than regret, I was discouraged thinking, 'I might have limits in this organization.' But instead of focusing on my limits, I think trying my best at every moment made what I am today.

- Who do you see as BNK Financial's biggest competitor currently?

▲ Both commercial banks and internet-only banks are competitors. Regional banks have not yet achieved the economies of scale or the comprehensive financial portfolios that commercial banks have, nor do they have the disruptive power of internet-only banks. So, they are caught in a sandwich position between the two.

BNK Financial Group Chairman Bin Dae-in is being interviewed near Busan North Port on the 24th. Photo by Jinhyung Kang aymsdream@

- DGB Financial chose to transition to a commercial bank; what is BNK Financial's response plan?

▲ Daegu Bank (DGB Financial) chose 'territorial expansion.' I regard it as a meaningful attempt. However, I question whether it is appropriate for us to do the same. Withdrawing from the region could rather increase other risks. Therefore, while firmly rooting ourselves in the region, we need to move toward acquiring competitiveness comparable to commercial banks or internet-only banks in fields such as marine, logistics, film, and digital.

- Are there specific preparations underway?

▲ We are planning a '2030 Mid-to-Long-Term Management Plan' that includes strengthening the role of the holding company, customer-centric management, management efficiency through organizational and personnel renewal, and discovering new businesses for future growth engines. We plan to announce it as early as the end of the year.

- Internal troubles are as challenging as external worries. You took office in March this year but faced difficulties within five months due to a 300 billion KRW project financing (PF) loan embezzlement incident at the subsidiary Gyeongnam Bank.

▲ Ultimately, such financial accidents stem from two issues: individual awareness and the organization's internal control system. First, there is a need to raise individual ethical awareness. We must continue humanities education so that employees do not find life's value solely in money. Second, even if someone intends wrongdoing, we must have a surveillance system that can detect it immediately at the moment of intent. We are discussing detailed plans through the 'Internal Control Innovation Committee' composed of external experts and the 'Internal Control Innovation Promotion Team' consisting of internal staff, accounting firms, consulting firms, and law firms. We expect to announce related content by the end of the year.

BNK Financial Group Chairman Bindaein is being interviewed near Busan North Port on the 24th. Photo by Jinhyung Kang aymsdream@

- Could you share your thoughts on win-win finance as a regional bank?

▲ We are considering ways to coexist long-term with the local community beyond simple financial support. For example, recently, we took over the operation of a small business support center struggling due to budget shortages, or we could carry out hygiene and environmental improvement campaigns at seafood markets like Jagalchi Market, considering regional characteristics. Just as broadcaster Baek Jong-won revitalizes traditional markets, BNK Financial believes it can bring meaningful changes to local small business owners and self-employed people by connecting our funds and staff.

- The 'chemical merger' with Gyeongnam Bank, which will mark its 10th year of acquisition next year, is also a long-standing challenge. While declaring the maintenance of the 'Two Bank' system where Busan and Gyeongnam Banks coexist, the two banks have yet to integrate their IT systems. What are the future plans?

▲ The easiest answer is 'merger,' but this is not a problem that can be solved simply by economic logic. Of course, maintaining an inefficient system like now is also a minus for both Busan and Gyeongnam Banks. To create synergy effects under the Two Bank system, we must build a unified system in all aspects such as IT, organization, and personnel management. If Busan and Gyeongnam Banks can leverage their respective strengths through this, it could have a greater effect than merging the two banks into one.

- Previous CEOs also tried to integrate systems but faced difficulties. Do you have a plan?

▲ Even if both banks are performing poorly and might receive B and C grades respectively, leaving them to solve it on their own is not a realistic answer. To get an A grade, both banks must be able to create synergy. Integrating systems is not for me or anyone else personally. I plan to persuade stakeholders as much as possible to achieve this.