[New Year Interview] "Quality Jobs Needed in Local Regions... Regional Banks Must Expand Their Role"

'2026 Economic and Financial Outlook' Relay Interview
③ Changyoung Lee, Executive Director and Head of ESG Strategic Management Research Institute, iM Financial Group
"Industrial Paradigm Benefits Concentrated in the Metropolitan Area... Decentraliz

"In a situation where industries, people, and capital are all concentrated in the Seoul metropolitan area, we must first disperse high-quality jobs to create a virtuous cycle."

Changyoung Lee, Executive Director and Head of ESG Strategic Management Research Institute at iM Financial Group, emphasized in a New Year interview with The Asia Business Daily on January 19, 2026, "A virtuous cycle is established when attracting promising companies leads to an increase in high-quality jobs, which attracts more people to the region, thereby increasing the gross regional domestic product (GRDP) and investment."

Changyoung Lee, Executive Director and Head of ESG Strategic Management Research Institute at iM Financial Group, is being interviewed by The Asia Business Daily on the 19th at the iM Financial Center in Jung-gu, Seoul. iM Financial Group

"Dispersing Jobs Is Essential for Regional Development... Foundational Support Is Key"

Lee believes that the fundamental cause of regional economic stagnation is the disappearance of high-quality jobs in local areas as the industrial structure is reorganized. From 2020 to 2024, the national GRDP growth rate was 129.3%, but Busan (88.7%) and Daegu (74.3%) lagged behind. In contrast, Gyeonggi Province posted a remarkable 238.8% growth rate. He explained, "While traditional manufacturing industries such as shipbuilding, steel, and automobiles once drove our economy, the industrial structure is now being reorganized around artificial intelligence (AI), batteries, robotics, and semiconductors. These industrial ecosystem hubs are mostly forming in the Seoul metropolitan area, which is leading to population migration between regions."

He proposed forming a virtuous cycle through the dispersion of jobs as a way to overcome regional economic stagnation. For example, attracting promising companies increases high-quality jobs and the regional population, which in turn boosts GRDP and regional investment, leading to regional development. To achieve this, he stressed the importance of building an industrial ecosystem tailored to each region and establishing the necessary foundation to attract and nurture companies. He particularly pointed out that regional banks have strengths in fostering local companies and should be utilized as the main agents of the productive finance initiative promoted by the current administration. Lee noted, "Regional banks allocate 56.1% of their loans to small and medium-sized enterprises (SMEs), compared to 41.5% for commercial banks. This means regional banks are better positioned to understand local companies' circumstances through relationship banking and can provide more detailed support."

"Regional Banks Must Transition to 'Community Banks' Focused on Function and Role"

Lee stated that regional economic stagnation is also causing difficulties for regional banks. He diagnosed, "The movement of industries, population, and capital is also changing the flow of finance," and noted that the sluggishness of local SMEs, which are the core customer base, is negatively affecting banks' profitability and soundness. He added that the strengthening of commercial banks' regional operations and the rapid growth of internet banks have also had an impact.

As a solution to revitalize the regional economy and support regional banks, he proposed the concept of a "community bank." This involves shifting from the geographically based concept of a regional bank to a function-, role-, and responsibility-based community bank. For example, transforming regional banks into institutions that are headquartered in the region, conduct business closely connected to the local community, and provide financial accessibility to local residents, thereby contributing to the revitalization of the regional economy. He also suggested that if regional banks are assigned the role of community banks, local government treasuries and regional public institutions should be encouraged to use these banks.

Changyoung Lee, Executive Director and Head of ESG Strategic Management Research Institute at iM Financial Group, is being interviewed by The Asia Business Daily on the 19th at the iM Financial Center in Jung-gu, Seoul. iM Financial Group

The following is a Q&A with Executive Director Changyoung Lee.

-Regional economic stagnation is severe. What are the causes of this stagnation?

▲The main cause is that high-quality jobs are disappearing from local areas as a new industrial ecosystem forms due to a paradigm shift in industry. This industrial ecosystem is mostly concentrated in the Seoul metropolitan area. As of 2024, 77% of the top 500 companies by revenue and 78 out of the top 100 companies by market capitalization (as of 2025) have their headquarters in the metropolitan area. The top market cap companies in Daegu (ISU Petasys) and North Gyeongsang Province (POSCO Future M) are ranked 77th and 45th on the KOSPI, respectively, while Busan and Gwangju have no companies in the top 100. Population migration between regions is a direct result of these changes in the industrial paradigm.

-What are some ways to overcome regional economic stagnation?

▲High-quality jobs, which are currently concentrated in the metropolitan area, must be dispersed. This will enable the formation of a virtuous cycle: attracting promising industries (companies) leads to an increase in high-quality jobs, which increases the regional population, which in turn boosts GRDP, expands regional investment, and ultimately leads to regional development. To achieve this, it is necessary to first create an environment where startups can thrive in the region by connecting with local startup support institutions (such as technoparks). Since 2019, iM Bank has been supporting the Daegu Startup Campus, organized by the Research and Development Special Zone Promotion Foundation. In collaboration with the Daegu Center for Creative Economy & Innovation, iM Bank also provides free space for nurturing startups (the 5th floor of iM Bank's second headquarters). It is also important to strengthen financial support for promising industries and SMEs in key regional areas, with regional banks playing a central role.

-It is understood that regional banks are also facing difficulties due to regional economic stagnation. What are the challenges?

▲The sluggishness of local SMEs, which are the core customer base of regional banks, is affecting the banks' profitability and soundness. Commercial banks have also made it more difficult for regional banks by strengthening their regional operations and taking over many local government and public institution treasuries. In addition, the combined household loan balances of the three internet banks (Kakao Bank, K Bank, and Toss Bank) have risen to a level comparable to that of the six regional banks (Gyeongnam, Gwangju, Busan, iM, Jeonbuk, and Jeju), putting additional pressure on regional banks due to their rapid growth.

-Despite this, how are regional banks contributing to overcoming economic stagnation in their regions?

▲They are helping to secure financial accessibility within their core business areas. The four major banks (KB Kookmin, Shinhan, Hana, and Woori) operate an average of 0.08 branches per 10,000 people, while regional banks operate 0.5 branches per 10,000 people. The proportion of loans to SMEs is also 56.1%, which is 15 percentage points higher than that of commercial banks (41.5%), and more than half of their total lending is allocated to SMEs, meaning they are playing a substantive role in supplying funds to the regional economy. Their contribution to local communities is also high relative to their earnings. For example, in 2024, iM Bank's contributions to the local community accounted for 12.4% of its net profit, the highest proportion among banks.

Changyoung Lee, Executive Director and Head of ESG Strategic Management Research Institute at iM Financial Group, is being interviewed by The Asia Business Daily on the 19th at the iM Financial Center in Jung-gu, Seoul. iM Financial Group

-What measures can be taken to enhance the competitiveness of regional banks?

▲The concept of a regional bank should be converted to that of a community bank. The current legal classification of regional banks is based on the "one province, one bank" system. This is a geographically based concept that only defines business areas and does not include any roles or functions. In contrast, a community bank is defined by its functions, roles, and responsibilities. It refers to banks that contribute to the sustainability of the regional economy by facilitating local capital circulation, fostering industries, and improving financial accessibility. The idea is to reconstruct the institutional status of community banks within the context of the local community and industry, rather than limiting them to the geographical concept of "regional."

-If community banks fulfill their responsibilities, what roles or incentives would be appropriate?

▲It is necessary to grant community banks priority rights when selecting local government treasuries or to require relocated public institutions to transact with community banks. This would strengthen the "local capital recycling system," whereby money spent in the region circulates within the region. If local government treasuries deposit a certain amount of public funds with community banks, these banks can use these deposits as the basis for lending, which means the larger the deposits, the greater the lending capacity and the more stable the funding. Since community banks maintain a lending structure centered on local SMEs, the increased lending capacity flows back into the regional economy, expanding its scale and transferring profits and income to local businesses and households, thereby revitalizing the regional economy. As the regional economy becomes more active, transactions among local economic agents increase, and funds are once again deposited in community bank accounts, structurally reinforcing the local capital recycling system. In contrast, large commercial banks are more likely to allocate deposits and investments on a national scale, even if they collect funds in a particular region, so the intensity of local recycling is inevitably different.

-What is the role of the iM Financial Group ESG Strategic Management Research Institute?

▲It serves as a think tank that considers the sustainable growth of iM Financial Group and the development of the regional economy. As its name suggests, with a focus on environment, social, and governance (ESG), it also acts as a control tower that oversees and coordinates the establishment and implementation of group-wide ESG strategies. The institute establishes the group's ESG vision and mid- to long-term strategies, and translates them into specific action plans tailored to the business characteristics and roles of each affiliate. Through this, it ensures that ESG management does not remain a declarative goal but functions as a practical management system.

-Are there any cases where you have made policy recommendations to financial authorities for regional economic development or the revitalization of regional banks?

▲One example is allowing regional banks to handle housing and urban fund loans and the issuance of national housing bonds. Before the system was changed, housing and urban fund loans were limited to the five major commercial banks (KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup). There was an inconvenience in that housing subscription applications could be made at regional banks, but the actual loans had to be taken out at commercial banks, which meant the extensive branch network and accessibility of regional banks were underutilized. By continuously raising this structural inefficiency and sharing the need for institutional improvement, the system was revised to enhance access to financial services in the regions.

◆Profile: Changyoung Lee, Executive Director and Head of ESG Strategic Management Research Institute at iM Financial Group

▲Born in 1970 ▲Master's in Trade and International Business, Kyungpook National University ▲Ph.D. in Human Resources and Organization, Yeungnam University ▲Former Head of ESG Strategic Management Research Institute, iM Financial Group ▲Former Head of Corporate Management Consulting Center, iM Bank ▲Former Head of People & Culture, iM Financial Group ▲Former Secretary of the Board of Directors, iM Financial Group ▲Current Head of ESG Strategic Management Research Institute and Secretary of the Board of Directors, iM Financial Group (since January 2025)