Placing consumers first
Over 300,000 individuals changed their primary bank accounts on Friday, the first day Korean residents have been allowed to easily shift their primary accounts between different banks.
Incremental changes have taken place in July and October. But until now, individuals who wanted to shift automatic payments for things like utility or credit card bills to an account at a different bank had to visit an actual branch or make a phone call.
Now, that can be done entirely online.
In the first two stages, 470,000 people changed their primary account. But this latest change of 300,000 people in a single day underscores just how many consumers were unhappy about the services they had been getting from their bank.
It is clear that the hassle of making a visit to a bank to change each automatic payment made people settle for subpar service regardless of how legitimate their complaints may have been.
Banks will now be forced to provide better services in order to keep their clients. The abnormally rigid market structure that served the companies’ interests and convenience at the expense of consumers had made the domestic banking system less competitive.
This new system should normalize the market’s structure to make financial institutions place consumers first. Financial authorities should keep up the oversight to ensure the transformation.
Financial reform is one of the four reforms the government had promised to accomplish. Government officials including Choi Kyung-hwan, the former deputy prime minister for the economy, have been demanding reform in the banking sector and criticizing banks’ short business hours and the high salaries bankers receive.
The Korean Employers Association also has advised banks to lower the salaries of recruits. But what needs to improve first is this market structure that discourages fierce and fair competition. Banks must reform themselves.
But this wave of reform should also spill over to all other sectors that fatten themselves under the protections of regulations and licenses. Consumers now must be more important than the markets.
JoongAng Ilbo, March 1, Page 26