S.Korea eyes innovation, coexistence of fintech, financial companies

Source:Xinhua Published: 2019/5/24 18:30:11

South Korea was eyeing the innovation and coexistence of fintech and financial firms as the government of President Moon Jae-in sought to foster the fintech industry as one of new growth drivers while encouraging the innovation of the existing banking sector.

The Financial Services Commission (FSC), the country's financial regulator, held the first fintech fair in Seoul Thursday, bringing together hundreds of businessmen from fintech and financial companies and officials from foreign financial regulators and international organizations. The fair would last till Saturday.

Moon focused on boosting the fledgling fintech sector as one of his innovative growth policies on expectations for synergy between the finance and the information and communications technology (ICT) industries in one of the world's most connected countries.

The government hoped the boost to fintech firms would be in harmony and coexistence with financial institutions as the innovation can bring turbulence to the banking sector despite the expected benefits to financial consumers.

FSC Chairman Choi Jong-ku told the opening ceremony that the government will make efforts to create a regulatory and investment environment where fintech and financial firms build a competing, yet cooperative relationship given the importance of a "balance between innovation and inclusiveness."

It would be not less significant to bring about a "soft landing" in the process of digital transformation and innovation that may marginalize or force jobless employees in the existing industry, than to pursue innovation, Choi said.

South Korean fintech companies were late to enter the fintech world compared with Chinese peers, but Kakao Corp., the operator of the country's top mobile messenger app Kakao Talk, currently prevailed over local rivals by walking in the similar footsteps of the Chinese e-commerce giant Alibaba.

Kakao launched the country's first mobile payment service in 2014 through its chat app, and started mobile money transfers less than two years later. The fintech business was spun off and named Kakao Pay in April 2017, trying to expand into the mainstream banking industry.

Just two months before the spin-off, Kakao Pay inked a strategic partnership with Ant Financial Services Group, operator of Alipay, that invested 200 million US dollars in the South Korean mobile payment app.

"Ant Financial and Kakao Pay are closely consulting based on the partnership, and cooperating in a variety of issues such as the sharing of financial knowhow from the technical and business perspectives," Song Mari, a communication manager of Kakao Pay, told Xinhua in its booth of the fintech fair.

"A room for cooperation between (South) Korea and China is large. It is possible between (fintech) firms and financial institutions (of the two countries)," Kwon Dae-young, chief of the financial innovation support group at the FSC said over phone.

Kwon noted that the financial regulator would promote the fintech sector while maximizing benefits and minimizing risks, saying there was also a large room for cooperation between the financial authorities of South Korea and China at a time when the fintech era requires a proper regulatory system.

Since the Moon Jae-in government was inaugurated in 2017, the financial regulator has sought to invigorate the fintech ecosystem by legalizing digital banks and launching a so-called regulatory sandbox, which the FSC chairman vowed to make a "testbed" for global fintech companies.

The regulatory sandbox allowed fintech startups to test new ICT technologies, such as artificial intelligence (AI) and big data, in financial services without tight regulatory hurdles faced by the banking sector. The FSC was considering lowering the regulatory hurdle further to grant permits to smaller fintech startups, which would be subject to stricter regulations as they grow up.

Calls have run high here for the innovation of financial institutions amid their heavy dependence on the stereotyped business models.

The importance of coexistence between fintech and financial firms was emphasized by Lee Seung-gun, the founder of Viva Republica that became South Korea's first fintech unicorn valued at 1.2 billion US dollars after financing 80 million dollars last December.

Lee founded Viva Republica in 2013, launching a money transfer app Toss that evolved into a money management app with 11 million registered users.

"I'll cooperate with existing financial companies as partners. I aim to make (Toss) the first digital service people seek when they need anything financial," Lee said.


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