By Kim Jae-kyoung
SINGAPORE — Korea is being left out of a global wave of fintech alliances due to its inward-focused strategy and a lack of deregulatory reforms to respond to market changes.
To become Asia's fintech center, it is urgent for Korea to build a "fintech bridge" with major nations by creating a regulatory environment conducive to fostering a new fintech model domestically and invite more innovative firms from abroad, according to analysts.
"From a global perspective the cooperation in London and other major capitals around the world is evidence that innovation is more readily accepted outside of Korea, giving fintech companies outside of Korea a clear competitive advantage to create markets for their products or services," said Jeffrey Jones, an international lawyer specializing in finance.
"It is very sad that we have one of the most tech-savvy populations on the globe, but the legal and regulatory system prevents this population from developing products and services that could create jobs for so many young people."
Such concern comes as global financial centers, such as Singapore, Australia and the U.K., have joined hands to bolster the fintech industry and solidify their leadership position as global financial hubs.
On June 16, the Monetary Authority of Singapore (MAS) and the Australian Securities and Investment Commission signed a contract to boost cooperation on financial innovation.
The new agreement will streamline the regulatory process, paving the way for fintech companies of Singapore and Australia to do business in each other's markets more easily.
In May, Singapore and the U.K. also agreed to form a "fintech bridge" to foster financial innovation.
The MAS and the U.K.'s Financial Conduct Authority signed a regulatory agreement to support fintech firms and investors by allowing them to share and use financial services information in their respective markets.
Growing alliances among traditional financial powerhouses come as efforts to solidify their leadership position by taking the lead in the coming era of financial services defined by fintech.
In particular, Singapore and Australia have already pushed themselves as fintech capitals of Asia, moving ahead of their rivals such as Hong Kong and South Korea.
"These alliances are likely to help with innovation and investment in innovation although I think that these things take a long time to have any meaningful effect," said Mark Yeandle, associate director of the UK-based Z/Yen Group of Companies.
Yeandle is the author of the Global Financial Centers Index.
Strategic approach
Korea is also doing what it can to catch up with the global trend.
On June 15, the Fintech Center of Korea, an affiliate of Korea's Financial Services Commission, hosted a Fintech Demoday in Singapore to promote Korean fintech firms' entry into Southeast Asia.
The center signed a memorandum of understanding (MOU) with the Singapore FinTech Consortium to help fintech firms find business partners and provide information on regulations in their respective markets.
The event was the second of its kind following one in Cambodia on June 13. The center plans to hold similar events in China, the U.K. and the U.S. later this year.
In late May, the center also signed a similar MOU with French Tech Hub Seoul, a Seoul-based affiliate of France's financial regulator aimed at promoting its fintech companies.
However, Korea's approach does not seem to be in the right direction from two aspects.
First, the strategy is focused too much on exporting Korean fintech abroad, rather than creating a financial innovation ecosystem through regulatory reforms and cooperation with other countries.
Second, direct discussions are not being held among regulators. For meaningful alliances to create a more vibrant fintech ecosystem, it is important to clear regulatory hurdles through binding agreements between financial regulators.
Jones pointed out that the primary problem Korea faces with the development of the fintech industry is the regulatory environment.
"It is difficult for fintech companies to market their services in Korea because of the regulations and licensing requirements that tend to protect existing financial services companies," he said.
"Generally any financial-related services through innovative fintech technologies are blocked because of barriers found in regulations governing foreign exchange controls, fees, approvals and business licenses."
SINGAPORE — Korea is being left out of a global wave of fintech alliances due to its inward-focused strategy and a lack of deregulatory reforms to respond to market changes.
To become Asia's fintech center, it is urgent for Korea to build a "fintech bridge" with major nations by creating a regulatory environment conducive to fostering a new fintech model domestically and invite more innovative firms from abroad, according to analysts.
"From a global perspective the cooperation in London and other major capitals around the world is evidence that innovation is more readily accepted outside of Korea, giving fintech companies outside of Korea a clear competitive advantage to create markets for their products or services," said Jeffrey Jones, an international lawyer specializing in finance.
"It is very sad that we have one of the most tech-savvy populations on the globe, but the legal and regulatory system prevents this population from developing products and services that could create jobs for so many young people."
Such concern comes as global financial centers, such as Singapore, Australia and the U.K., have joined hands to bolster the fintech industry and solidify their leadership position as global financial hubs.
On June 16, the Monetary Authority of Singapore (MAS) and the Australian Securities and Investment Commission signed a contract to boost cooperation on financial innovation.
The new agreement will streamline the regulatory process, paving the way for fintech companies of Singapore and Australia to do business in each other's markets more easily.
In May, Singapore and the U.K. also agreed to form a "fintech bridge" to foster financial innovation.
The MAS and the U.K.'s Financial Conduct Authority signed a regulatory agreement to support fintech firms and investors by allowing them to share and use financial services information in their respective markets.
Growing alliances among traditional financial powerhouses come as efforts to solidify their leadership position by taking the lead in the coming era of financial services defined by fintech.
In particular, Singapore and Australia have already pushed themselves as fintech capitals of Asia, moving ahead of their rivals such as Hong Kong and South Korea.
"These alliances are likely to help with innovation and investment in innovation although I think that these things take a long time to have any meaningful effect," said Mark Yeandle, associate director of the UK-based Z/Yen Group of Companies.
Yeandle is the author of the Global Financial Centers Index.
Strategic approach
Korea is also doing what it can to catch up with the global trend.
On June 15, the Fintech Center of Korea, an affiliate of Korea's Financial Services Commission, hosted a Fintech Demoday in Singapore to promote Korean fintech firms' entry into Southeast Asia.
The center signed a memorandum of understanding (MOU) with the Singapore FinTech Consortium to help fintech firms find business partners and provide information on regulations in their respective markets.
The event was the second of its kind following one in Cambodia on June 13. The center plans to hold similar events in China, the U.K. and the U.S. later this year.
In late May, the center also signed a similar MOU with French Tech Hub Seoul, a Seoul-based affiliate of France's financial regulator aimed at promoting its fintech companies.
However, Korea's approach does not seem to be in the right direction from two aspects.
First, the strategy is focused too much on exporting Korean fintech abroad, rather than creating a financial innovation ecosystem through regulatory reforms and cooperation with other countries.
Second, direct discussions are not being held among regulators. For meaningful alliances to create a more vibrant fintech ecosystem, it is important to clear regulatory hurdles through binding agreements between financial regulators.
Jones pointed out that the primary problem Korea faces with the development of the fintech industry is the regulatory environment.
"It is difficult for fintech companies to market their services in Korea because of the regulations and licensing requirements that tend to protect existing financial services companies," he said.
"Generally any financial-related services through innovative fintech technologies are blocked because of barriers found in regulations governing foreign exchange controls, fees, approvals and business licenses."
