'Seoul needs better human capital to become financial hub'

A view of Seoul's financial center on Yeouido, Seoul / gettyimagesbank

By Kim Bo-eun

Seoul's profile as a financial center has improved, but it still needs need to develop more competent human capital, according to the London-based think tank Z/Yen Group which publishes the Global Financial Centers Index.

“In relation to the financial centers of Tokyo, Singapore and Hong Kong, Seoul has some work to do to match their performance in the business environment, reputation and human capital factors. Its human capital scores in particular are relatively low,” Z/Yen Group's Head of Indices Mike Wardle told The Korea Times via email, Monday.

The think tank measures human capital by the availability of skilled personnel, labor market flexibility, education and development, and quality of life, taking into account various existing indices.

Seoul has ranked 50th or lower in several human capital related rankings, including the IMD World Talent Ranking.

The IMD ranking measures the degree to which a country is able to cultivate, attract and retain a skilled workforce. Countries in the top ranking have an emphasis on nurturing long-term talent, by focusing on investment and development.

As for the other factors cited by Wardle as areas for improvement, reputation is measured by city brand and appeal, level of innovation, attractiveness and cultural diversity. The business environment is measured by political stability and rule of law, the institutional, regulatory and macroeconomic environments, and tax and cost competitiveness.

At the same time, he noted Seoul does possess strengths.

"Foreign firms are likely to be attracted to Seoul because of its location ― close to the large markets of Japan and China ― and its industrial and trading base. Also its infrastructure, which is very well developed,” he said.

Wardle's remarks come after Seoul's ranking jumped to 25th out of 111 cities in Z/Yen's latest publication of the index last month. In the previous ranking published in March, Seoul was 33rd out of 108 cities.

The ranking is determined by two data sets ― assessments through surveys and quantitative measures. Seoul's ranking climbed based on improvements in both, Wardle said.

The average assessment given to Seoul by financial professionals rose from 633 to 712, he said.

As for quantitative measures, Seoul improved its performance in its business environment and financial sector development.

“For example, in the business environment, Seoul's rank position in the Financial Secrecy Index rose 21 places and in the individual income tax measure, it rose 10 places,” Wardle said.

“On financial development, its ranking rose due to the inclusion of the Korea Stock Exchange in the Sustainable Stock Exchanges list, and improvements in the ranking for Financial System Green Alignment and the Value of Bond Trading score.”

Seoul was also included in the 15 centers cited likely to become more significant over the next two to three years.

It also ranked 18th in the top 35 locations for fostering the fintech industry. Respondents said access to finance and the availability of skilled people were leading factors in determining competitiveness as a fintech center. They also referred to big data analytics and payment transactions systems as the most important applications.

Meanwhile, Wardle said Korea's strategy to foster multiple financial hubs would not lower overall competitiveness given Busan's focus of its financial services on the maritime and derivatives sectors.

"Such specialization is unlikely to draw the focus away from Seoul in relation to other fields of finance," he said.

Z/Yen Group's Executive Chairman Michael Mainelli said, "I believe that intra-national competition can help develop a larger national presence and market while also increasing quality."

"There is clearly a base level of population and economy required but it is intriguing to see high-scoring countries that are not the size of the U.S. or China doing well, such as Switzerland with its two centers of Zurich and Geneva and a population of 8.57 million,” he said.

"Korea might fit that model well, and the increasing growth of Busan may be developing a larger Korean market."