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Tech firms’ rush into finance puts pressure on banks, regulators

Koh Seung-beom, chief of the Financial Services Commission, speaks during a press conference in Seoul on Dec. 30, 2021. (Yonhap)
Koh Seung-beom, chief of the Financial Services Commission, speaks during a press conference in Seoul on Dec. 30, 2021. (Yonhap)
Naver and Kakao -- Korea’s two largest online service providers -- are prompting financial companies to better meet fintech needs and regulators to write rules that are fair to both of them.

Naver Financial, a key Naver fintech subsidiary, started offering loans last year to small businesses with Woori Bank. The Naver Financial CEO said last month that he was considering seeking a permit to oversee more banking services to issue insurance and credit cards.

Meanwhile, Kakao Pay, a mobile payment arm under Kakao empire, is expected to introduce insurance services this year. In response, financial companies are racing to counter the tech giants expanding their businesses.

Shinhan Financial Group, one of the four banking giants in the country, recently named a former IBM managing director as its digital chief officer to accelerate a push to expand its digital services.

Meritz Fire & Marine Insurance is working with Kakao Pay to develop financial products for people between 30 and 50, with officials at the insurance firm saying the services will kick off as early as this month.

Hanwha Life Insurance has already unveiled what it calls an “artificial intelligence-powered fund,” which helps clients find the right life insurance plan that invests in stocks and bonds. The service is offered to those who have signed up for Kakao Talk, the most widely used messaging app here.

And regulators are stepping up efforts to level the playing field for companies engaging in fintech services, as they face mounting criticism for being soft on tech firms like Naver and Kakao.

“We will help tech firms expand fintech services as long as they bring about innovation and better competition. But we will make sure regulations are in place to protect financial stability and consumers,” FSC chief Koh Seung-beom said in a New Year’s address Friday.

Koh toned down his rhetoric last month, when he vowed to use the commission’s oversight power to prevent tech firms’ potential data monopoly.

Jeong Eun-bo, head of the Financial Supervisory Service, touched on a similar note in his New year’s address the same day, describing a “level playing field” as paramount in competition between tech firms and financial service companies looking to offer broader fintech services.

“A system that guarantees both fairness and cooperation, that’s what we’re after,” Jeong said.

By Choi Si-young (siyoungchoi@heraldcorp.com)
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