Financial regulators to launch 'one unit, one firm' military financial education program this year

South Korea's financial authorities are pushing ahead with a "one unit, one firm" program that pairs each military unit with a single financial company to deliver tailored financial education to service members. The initiative comes amid growing concern that young soldiers are leaving the military already burdened with debt, having borrowed heavily during their service to invest in stocks and cryptocurrencies or to fund online gambling habits.

Financial industry sources said Tuesday that the Financial Supervisory Service, the Korea Federation of Banks and the Korea Financial Investment Association have recently asked banks and securities firms to draw up company-level plans to launch the program before the end of the year. The scheme is modeled on the FSS's existing "one company, one school" financial education initiative and would extend it to military bases, establishing a regular education partnership between financial firms and individual units.

Financial companies are currently reviewing whether to participate, what educational formats to use and which units to target. "Some financial firms already run financial education or support programs for specific military units, so the program will likely combine expanding those existing efforts with forging new partnerships," said an official in charge of social contribution activities at one financial firm.

Educational content will be tailored to each sector's area of expertise. The financial investment industry will focus on the dangers of leveraged investing and excessive use of margin, as well as asset allocation and investment-linked financial planning. Banks are expected to center their programs on preventing voice phishing and other financial fraud, managing credit scores and loans, and building savings.

To support the rollout, a joint workshop organized by financial industry associations will be held for fiscal officers at units under the direct command of the Ministry of National Defense. Around 150 unit fiscal officers are scheduled to attend a two-day, one-night workshop on Oct. 20 at Hana Global Campus, a training facility operated by Hana Financial Group in Cheongna, Incheon. The aim is for the officers to absorb the material and then pass it on to soldiers when they return to their units.

The push for the program reflects concern over a growing number of soldiers in their 20s — with little or no credit history — who borrow money to invest in stocks and cryptocurrencies, only to leave the military weighed down by mounting debt.

Soldiers' pay has risen sharply in recent years, giving them more money to invest, while the military's decision to allow smartphone use on base and the spread of non-face-to-face lending have made it easier to take on debt and invest more aggressively. Online advertisements for loan products targeting soldiers — marketed under names such as "loyalty loan" and "sergeant loan" — openly promote annual interest rates of up to 20 percent, near the legal maximum.

Yet financial education inside military bases has struggled to keep pace with soldiers' changing investment and money-management behavior. Because bases are scattered across the country, units have tended to rely on education provided by the banks that handle their government accounts or military welfare cards, or by the Korea Armed Forces Mutual Aid Association. Even that education often veers into product promotion or fails to stay current, leaving programs stuck at a basic level — covering concepts such as the Rule of 72, which estimates how long it takes for an investment to double.

"The problem has now spread beyond enlisted soldiers to junior officers and non-commissioned officers caught up in online gambling and debt-fueled investing," a military official said. "We need to go beyond simply stressing the importance of saving and teach practical financial skills — things like loan interest rates, credit scores and debt restructuring."

More than half of all loans from consumer finance companies to military personnel went to active-duty enlisted soldiers. According to the FSS, the 30 largest consumer lending firms had a combined 44.4 billion won ($33.1 million) in outstanding loans to military personnel as of the end of last year. By rank, active-duty enlisted soldiers accounted for the largest share at 24.2 billion won, or 54.5 percent of the total, followed by career military personnel including officers and non-commissioned officers at 15.8 billion won, or 35.7 percent.

The number of service members seeking debt restructuring is also rising. According to the Credit Counseling and Recovery Service, the total amount of debt restructuring by military personnel nearly doubled in four years, climbing from 5.6 billion won in 2021 to 10.2 billion won last year. In response, the authorities approved a plan to strengthen on-site financial education for service members at a deliberation meeting on Aug. 31.