[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 E-Daily 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 had completed the first phase of relocation stated that they or key personnel in their departments 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 people) 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% of respondents (16 people) 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. 30.2% (13 people) 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 face-to-face 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 the only thing that’s increased is the number of times I ride the KTX.”

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 respondents) reported completing more than 80% of their core tasks at their regional work locations. In contrast, 39.5% (17 respondents) stated that business trips to Seoul were essential for handling key tasks, followed by those who said they relied entirely on the Seoul office or business trips (25.6%) and those who reported that less than 50% of tasks were handled locally (23.3%).

This dual work structure 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 operational staff and specialized personnel, 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 personnel leave and even the recruitment of new, high-caliber talent faces difficulties.

Survey participants conveyed the difficulties on the ground, stating: “Only the institutions have moved to the provinces; related private companies and infrastructure have not followed, so a financial ecosystem has not been established at all”; “Simply relocating the institutions’ physical locations under the guise of balanced regional development is meaningless”; and “While we agree with the intent behind the relocation to the provinces, if institutions are relocated to too many different 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 are unanimous in their view 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 distribution will not achieve the policy’s goals.

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

Experts and field officials are proposing the following alternatives for a successful relocation: △ the creation of specialized financial clusters in specific metropolitan cities that bring together 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 the 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 carried out 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 phase of relocations.

Mr. C, an employee at an institution relocated in the first phase, emphasized, “Even if we relocate to the provinces, it’s merely a change in the location of our headquarters; we remain public financial institutions serving the people,” adding, “Institutional support will be necessary to ensure there are no disruptions to our operations.”