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- Research Topic Financial Services Industry
- Page 321
- Summary
I. Introduction
Korea’s securities industry is facing a challenging situation of continued decline in revenues and profitability, particularly in its core brokerage business. And with the exception of the growth in recent years of OTC derivatives, such as ELS and DLS, there is no clear growth in the overall industry to offset the slump in its main business areas.
In this study, we present a picture of the industry’s future direction based on the changes in Korea’s financial market environment. In particular, we estimate the size of the key markets up to 2020, along the main businesslines of securities firms, and draw out strategies and competence-strengthening measures for the securities industry to lead Korea’s capital market growth.
Ⅱ. Analysis on Business Environment
Currently, Korea’s financial industry faces the two mega trends that will impact its future direction. A rapidly aging population and a slowdown in the rate of economic growth and accompanying low interest rate environment are two major forces that will greatly impact the future of the industry.
Korea became an aging society in 2000, and is expected to become an aged society in 2018, and then a super-aged society in 2026. Korea’s GDP recorded annual average growth of 5.2% from 2000 to 2007 before the global financial crisis, but the growth plummeted to 2.9% in the post-crisis era (2008 ~ 2012). Despite the projection that Korea’s economy will recover near-term, the longer-term estimated annual GDP growth is 3.5% from 2013 to 2020.
These changes, by themselves and interactively, will deliver fundamental changes to the business of Korea's securities firms. Business areas such as brokerage face further challenges to growth, while in other areas such as wealth management and M&A advisory service, new opportunities may emerge as a result of these fundamental shifts.