Reading a recent piece by Kim Yong-beom, head of the Presidential Policy Office, reminded me of the concerns I have long felt in the financial field. Another word for finance is "credit," and credit is ultimately "faith." Although it appears to operate on numbers, collateral, and models, the essence of finance lies in believing in the future potential of people and companies and connecting that potential with capital.
This faith, however, is not unconditional optimism. Finance is "an industry that doubts in order to believe." Doubt and analysis should not be tools to justify rejection but rather processes for believing more responsibly. The moment doubt becomes the goal, finance drifts from its original function.
The role of financial institutions, as described by Joseph Schumpeter, can be understood in the same context. Finance is not merely a mechanism for safekeeping money or allocating it only to safe places. It is an institution that moves society's capital to more productive areas and creates economic change by underwriting the risks of innovation and challenge.
Nevertheless, Korean finance has long grown accustomed to avoiding risk rather than interpreting and underwriting it. Banks offer the lowest interest rates to their safest customers, while the securities industry and capital markets have settled for already-proven deals. As a result, the areas where finance is most needed and where it could create sufficient opportunities have instead been pushed outside the market.
Kim's problem statement touches precisely on this point. The question "Why does the person in the greatest difficulty pay the highest cost?" is not an emotional slogan but an essential question about the sophistication of the current financial structure. It is time to reflect on whether financial institutions are performing a role worthy of public trust.
Credit ratings and past data are of course important, but judging the future solely on the past is like driving while looking only at the rearview mirror. You cannot move forward by looking only at the rearview mirror. What finance should truly do is build on past records while also reading the changes, recoveries, and growth possibilities behind them.
The same principle applies to startup investment and mid-credit finance. If future possibilities are excluded simply because past numbers are insufficient, the role of finance can hardly be established in the first place. If the essence of finance is credit, that is, faith, then financial institutions must have the ability to find grounds for believing in the future.
The problem lies more in organizational structure than in individual attitudes. Procedures and regulations protect individuals, but at some point they can also become walls that obscure the purpose of finance. When procedural compliance becomes a performance indicator and lowering the default rate becomes the sole objective, financial institutions transform from organizations that underwrite risk into organizations that avoid it.
As Jeff Bezos pointed out in Amazon's shareholder letter, procedures should be a means to an end. The moment procedures themselves become the goal, organizations only say, "We followed the rules," and take no responsibility for outcomes. In the financial sector as well, when the phrase "It does not meet the criteria" is repeated, the function of creating faith is weakened.
On the ground, underwriting risk is never easy for industry practitioners. Even when individuals want to make bold judgments, if the internal evaluation system is geared toward avoiding defaults and managing short-term profit and loss, risk avoidance becomes the more rational choice. Ultimately, the problem with Korean finance lies not with individuals but with its institutions and KPI structure.
For this reason, I believe the core of financial reform is not expanding products or adjusting interest rates, but changing the evaluation system. What should be assessed is not how much risk has been avoided, but how precisely risk has been understood and structured. Achievements that create new grounds for trust should be recognized. Risk always exists, but finance that does nothing for that reason cannot be called responsible finance. What matters is the ability to divide risk more finely, understand it more accurately, and underwrite it in a manageable form.
Investment operates on the same principle. Failure is not merely a loss but can also arise from missing opportunities. Turning away from possibilities because one fails to properly understand risk may be the true failure of finance and investment.
I view Kim's piece as both a criticism of and an expectation for finance. For Korean finance to restore trust, it must understand the people and companies outside the castle walls more precisely, rather than remaining inside a safe fortress. Banks and capital markets must rebuild the broken connections of credit.
If Korean finance continues to screen only safe customers, it is closer to a mere screening device than to finance. The essence of finance lies in reading possibilities that have not yet been fully explained and transforming the associated risks into a structure that society can bear. Finance is an institution of faith, and faith begins with deeper understanding and responsibly sharing risk. Korean finance must now move beyond the stage of avoiding risk and advance toward a finance that understands and underwrites risk, reallocating capital to productive places.
