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[Top Bankers] Head of bankers’ club in South Korea calls for stricter regulation on big tech
Former NH Financial chief say banks still have upper hands in credibility, security of financial services amidst intensifying digital warBy Park Han-na
Published : March 10, 2021 - 16:21
This is a part of series of interviews and analysis of South Korea’s top bankers, policymakers and investors leading the financial industry here. This is the first installment. -- Ed.
Banks are facing ever intensifying competition from IT companies as consumers gravitate toward digital financial services tailored to their needs.
Korea Federation of Banks Chairman Kim Gwang-soo, however, believes lenders have a distinctive competency that could overcome challenges posed by fintech rivals.
“While big tech and fintech firms play a role of brokers in providing financial instruments, banks have expertise across a wide range of services and offer high level of security,” Kim said during a press conference marking his 100th day in office Tuesday.
The bureaucrat-turned-banker was elected late last year to lead the nearly a century-old organization, the KFB, that represents financial institutions conducting banking and related businesses in Korea. Kim’s new leadership role in South Korea’s top bankers’ club came at a critical time when the market is fast moving from physical to digital. In the course of rapid transformation, Kim, in rare occasion, voiced concerns over banks facing stricter restriction than emerging fintech platforms, saying that such environment is not fair to existing players.
“Concerns have been raised that big techs’ market dominance could hamper stability in the financial industry and newly-introduced digital financial policies could cause reverse discrimination against existing financial institutions,” he said.
His remark came as major internet platform players such as Kakao and Naver threaten to eclipse banks with one-click digital payment systems and data-driven services based on their wide customer bases.
At the center of the intensifying digital war between traditional players and newcomers is MyData, a government-led project that grants business licenses to financial institutions and tech companies to widen access to client information so as to foster personal credit information management services.
Banks’ MyData service will be more reliable than those offered by tech-laden rivals as the former are already under strict internal control and solid security infrastructure, Kim said.
“I think that banks will be able to provide a one-to-one customized product to the customer because it is a product supplier who directly designs and sells financial products,” he added.
What the government needs to do is to separate big tech from fintech companies and come up with a new set of regulations to strengthen monitoring on big techs’ credit risks, according to Kim.
“There’s a need for a stricter regulation for big tech platforms which have a huge impact (on the market),” he said.
Newly enacted legislation on financial consumer protection, set to come into effect on March 25, is expected to put more burden on banks and hinder their efforts to digitalize their operations. For fair game, the new law should be applied to fintech and big tech firms, not just banks, he added.
“Amid the protracted COVID-19 pandemic, contactless services are progressing faster than expected. Banks need more efforts to transform themselves into platform companies to develop long-term competitiveness,” he said.
Kim is one of the leading financiers in Korea who rose to the top level of the industry after decades of service in the government.
Before entering the private sector, he worked for the Finance Ministry and Financial Services Commission for 30 years.
Prior to joining the KFB, Kim served as the chairman of NongHyup Financial Group for over two years since April 2018.
During his tenure, NongHyup Financial Group posted an all-time record net profit of over 1 trillion won ($874.4 million) for two consecutive years.
His strategic decisions on building the foundation for digital transformation and expanding global business were said to have helped the financial giant with a large base of clients in the agricultural sector to secure future growth. Now as the head of the KFB, Kim also faces market pressure to adopt the ESG principle.
For starters, the organization last month added two new departments on sustainable management and legal affairs, but there has still been no major drive for change, particularly on governance.
By Park Han-na (firstname.lastname@example.org)
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