INTERVIEW KOMSCO CEO committed to transforming banknote manufacturer into ICT, export, culture-oriented entity
Korea Minting and Security Printing Corp. (KOMSCO) CEO Sung Chang-hoon poses at his office in Seoul. The CEO highlighted the state-run company's goal of business transformation for information and communications technology (ICT), export and creative cultural content to adapt for a cashless society. Courtesy of KOMSCO
Korea is moving faster toward a cashless society, which poses both risks and opportunities for Korea Minting and Security Printing Corp. (KOMSCO).
The risk comes from KOMSCO’s waning profitability due to the falling use of cash, whereas opportunity comes from its extensive know-how and expertise that it accumulated as the country’s sole manufacturer of banknotes and circulating coins for over seven decades.
Against this backdrop, KOMSCO CEO Sung Chang-hoon is committed to ushering in a sweeping transformation of the state-run corporation into a versatile business entity in three areas — information and communications technology (ICT), export and creative cultural content.
“Reinventing our expertise in printing, minting and engraving is essential to make a breakthrough into new industries and step up as a global leading company, and that’s the vision I’ve been underlining ever since I took office,” the CEO told The Korea Times during an interview at his office in Seoul, May 16.
He explained KOMSCO boasts “world-class” counterfeit deterrent technologies in currency production, which are applied in a range of businesses after it started in October 1951 at a shabby wood building in Busan in the middle of the Korean War.
“Nevertheless, the relevant technologies will be obsolete and there will be no future for KOMSCO if we do not make progress in using them,” Sung said. “In that regard, the vision for a new KOMSCO oriented toward ICT, export and creative cultural content can help laying groundwork for a new, sustainable business ecosystem and overcoming challenges coming from declining profits.”
Commemorative medals themed on Korea's cultural icons, such as the Pensive Bodhisattva statue from the Three Kingdoms period and K-pop sensation BTS, are on a display at KOMSCO-run Currency Museum of Korea in Daejeon. Courtesy of KOMSCO
A promotional image of a mobile national identification card is seen at KOMSCO-run Currency Museum of Korea in Daejeon. Courtesy of KOMSCO
Technological value chain
Headquartered in Daejeon, KOMSCO operates under the Ministry of Economy and Finance but also works closely with the Bank of Korea (BOK).
Its conventional businesses include identity documents such as national identification cards and passports, security papers such as paychecks, postage stamps and gift certificates, brand and quality certification for commercial goods, as well as precious or commemorative metals such as medals and gold bars.
These businesses are at a transitional stage toward digitalization, to cope with higher demand for mobile and other forms of digital payments and a subsequent decline in production of money.
According to KOMSCO, the rate of cash payments out of all financial transactions in Korea dropped to 14.6 percent in 2021 from 17.4 percent in 2019.
Correspondingly, 50 percent fewer banknotes are being produced this year compared to 2014, while 90 percent fewer circulating coins are made over the 10 years.
“Under the circumstances, KOMSCO has developed a value chain that allows KOMSCO’s craftsmanship in manufacturing to spread into new industries,” Sung said.
He assessed that the transition is going well, noting that digital technology-based businesses account for more than half of KOMSO’s annual sales of $450 billion won ($330.39 million).
“The technological transition is especially inevitable as it is linked to our broader, future goal concerning ICT, export and creative cultural content,” he added.
For instance, the technology used in identity documents has made a mobile driver's license available in 2022. Plus, a mobile national identification card is planned to make its debut in 2025.
Furthermore, consultation is underway between KOMSCO and its peers from developing countries on exports of mobile identity as an intangible asset.
In relation to ICT, KOMSCO is mobilizing its expertise to develop a central bank digital currency (CBDC). An envisioned virtual form of money, a CBDC is different from cryptocurrencies as it is created by a central bank and therefore gives consumers guaranteed protection.
The BOK is among 100 central banks worldwide that have been working on CBDCs, including those from the United States, the European Union, China and Japan.
The CBDC ecosystem is expected to have a two-tiered structure: "institutional central bank currency" traded between the BOK and financial companies and "tokenized deposits" between financial companies and the public. KOMSCO is seeking a role in the latter.
KOMSCO’s blockchain technology is used on "chak," an online payment system for gift certificates exclusively distributed by provincial governments to nurture spending and growth in regional economies.
“The case of CBDC-linked blockchain technology is an excellent example of KOMSCO’s transition from a manufacturing business to an ICT-focused enterprise,” Sung said. “We’ll faithfully carry out our role to complete a CBDC network and successfully be reborn as a digital currency manufacturer.”
KOMSCO CEO Sung Chang-hoon, second from left, takes a look at coins and medals that are on a display during the World Money Fair 2024 in Berlin in February. Courtesy of KOMSCO
With regard to creative cultural content, KOMSCO is building on its manufacturing skills on circulating coins, medals and gold bars in order to produce bullion coins.
Made of precious metals such as gold and silver, bullion coins can have a higher value than commemorative coins or gold bars for their rarity in relation to the cultural power of a respective country.
A bullion coin is distinguished for containing a national symbol, such as a bald eagle of the U.S., giant panda of China or Vienna Philharmonic of Austria.
The international bullion coin market is estimated to be worth over 20 trillion won, and it is considered nearly untapped as only seven countries compete worldwide. The seven also include Australia, Canada, the United Kingdom and Spain.
KOMSCO CEO Sung Chang-hoon, right, poses with his counterpart from Spain's banknote manufacturer, CEO Maria Isabel Valldecabres, during his visit to Spain, Feb. 5 this year. Courtesy of KOMSCO
“All these countries are cultural powerhouses, and thus making their bullion coin an attractive collectors' item,” Sung said. “And considering Korea’s cultural power as seen from the popularity of K-pop, I believe our bullion coin will certainly have competitiveness if it is released.”
In the meantime, the CEO reckoned that shifting toward a horizontal organizational structure is crucial for the company’s business transformation.
He noted the so-called "MZ Generation,” a Korean term referring to Millennials and Generation Z, makes up about 40 percent of the company’s entire 1,400 employees.
“Efficiency based on fairness, challenge mindsets and flexibility are crucial to embrace these young employees who will be at the center of KOMSCO’s future after all,” the CEO said.
He said he accordingly has stressed management based on five principles — open communication, active participation in decision-making regardless of rank, a shared, unified image of the company’s vision, constructive knowledge-building experiences and wider use of digital tools.
Who is Sung Chang-hoon?
Sung was formerly a career financial bureaucrat and held various key positions as he climbed up the ladder after passing the rigorous national civil service exam in 1993.
He was the director of the Ministry of Economy and Finance’s division on long-term economic strategy before being assigned to the division on economic structural reform.
Before he was appointed the KOMSCO CEO, Sung oversaw the support board of the National Economic Advisory Council, a presidential advisory body providing advice to the president on various economic issues.
Born in 1967, he studied economics at Korea University and earned a master's degree and a doctorate in economics at the Paris Institute of Political Studies in France.