[Edaily Marketin Hur Jieun Reporter Ji Young] Financial institutions that have relocated to regional areas are still struggling to find their footing. While discussions regarding further relocations of financial institutions to regional areas are heating up, doubts about their effectiveness persist even in areas where the first relocations have already been completed. Critics point out that there is an urgent need to develop practical policies that go beyond simply moving headquarters to regional areas and instead focus on establishing integrated hubs that foster a financial ecosystem where information and people converge.

According to the results of a survey conducted by Edaily from August 26 to 31 among 2,642 financial institution employees (analyzing 43 employees from institutions that had completed their first-phase relocation out of 2,368 valid respondents), the majority of staff at institutions that have completed their relocation still rely heavily on the Seoul metropolitan area for a significant portion of their work.

More than half—51.2% (22 people)—of respondents from institutions that completed the first-phase relocation stated that they or key personnel in their department travel to the Seoul metropolitan area “four or more times a month.” In effect, this means they travel to Seoul for business at least once a week. Notably, 25.6% (11 respondents) reported traveling “seven or more times a month,” meaning that one in four employees at agencies that completed the first phase of relocation spends nearly half the week on the road.

The reason these employees are forced to repeatedly make these exhausting business trips to Seoul is directly linked to the nature of the financial industry. When asked about the purpose of their business trips (multiple answers allowed), 37.2% (16 respondents) cited “liaison with the government and National Assembly,” such as visits to the National Assembly, the Financial Services Commission, and the Ministry of Economy and Finance. Meanwhile, 30.2% (13 respondents) selected “face-to-face meetings with market participants,” such as financial companies, institutional investors (LPs), and issuers, as the reason for their trips to Seoul. These two categories account for 67.4% of all reasons for business travel.

The financial sector operates on the basis of intangible information and in-person networks. With both the market and regulatory authorities concentrated in the Seoul metropolitan area, the relocation of individual institutions to regional areas has created a physical constraint: they must constantly travel back and forth to Seoul for information exchange and decision-making. Employee A, who works at an institution that underwent the first phase of relocation, lamented, “While only the physical location has moved, work processes and decision-making structures remain unchanged, so I’ve just ended up taking the KTX more often.”

Only 11% of Work Completed Locally… The Double Burden of Staff Turnover and Recruitment Difficulties

Given this situation, the ability to complete work at regional headquarters is extremely low. Only 11.6% (5 people) reported that more than 80% of their core work is completed at their regional workplaces. In contrast, 39.5% (17 respondents) stated that business trips to Seoul are essential for handling key tasks, followed by those who rely entirely on the Seoul office or business trips (25.6%) and those reporting that less than 50% of tasks are handled locally (23.3%).

This dual-track work system is leading to weakened organizational competitiveness and a brain drain. Among respondents from agencies that relocated in the first phase, 53.5% (23 people) assessed that the exodus of staff and specialists, as well as recruitment difficulties, have become severe since the relocation to regional areas. Only 7.0% (3 respondents) reported that there was almost no impact. This serves as a warning from the field that the organizations’ long-term capabilities are deteriorating as skilled talent leaves and even the recruitment of new high-caliber personnel faces difficulties.

Survey participants conveyed the hardships on the ground, stating: “Only the institutions have moved to the provinces, but since related private companies and infrastructure have not followed, a financial ecosystem has not been established at all”; “Simply relocating institutional headquarters under the guise of balanced regional development is meaningless”; and “While we agree with the intent behind the relocation to the provinces, if relocations occur in too many places, the effect will be negligible.”

For Further Relocations to Succeed… “We Must Move Away from a One-Size-Fits-All Decentralization Approach”

The limitations revealed in the first phase of relocations clearly highlight the challenges that the upcoming second-phase relocation policy must overcome. Industry professionals unanimously agree that the one-size-fits-all, scattered placement of institutions seen in the past must not be repeated. They criticize the approach, arguing that simply focusing on the number of institutions to be relocated or regional quotas will not achieve the policy’s objectives.

Mr. B, an employee at an institution relocated in the first phase, pointed out, “There must be factors that encourage the financial sector to voluntarily move to the provinces for an ecosystem to naturally take shape,” adding, “The idea that simply relocating financial institutions will cause everyone else to follow is a one-dimensional way of thinking.”

Experts and industry insiders are proposing the following alternatives for a successful relocation: △the creation of specialized financial clusters in specific metropolitan cities by concentrating private financial firms and related institutions; △the establishment of a “Dual Hub” system where Seoul offices and regional headquarters efficiently share functions; and △the development of a remote decision-making system with the government and National Assembly. This is because simply splitting individual public institutions and dispersing them across multiple regions will not allow for the formation of a business network or ecosystem.

Consequently, it has been pointed out that if the government wishes to turn additional relocations to the provinces into tangible achievements, it must first design a financial ecosystem—determining which financial functions will be comprehensively performed in each region—before proceeding with the physical process of designating the institutions and regions to be relocated. Going beyond support for living conditions, laying the groundwork for the financial industry’s inherent networks to function effectively is expected to be the key to the success of the second round of relocations.

Mr. C, an employee at an agency involved in the first round of relocations, emphasized, “Even if we relocate to the provinces, it will only change the location of our headquarters; we will still be public financial institutions serving the people,” adding, “Institutional support will be necessary to ensure there are no disruptions to our operations.”