Banking apps approved to expand into platform businesses

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By Anna J. Park

Banking apps in Korea could soon be able to provide various platform business functions, such as food delivery and shopping, as early as next year.

The approval allowing local banking apps' expansion into the platform business was made late last week, as the Financial Services Commission (FSC) decided to ease regulations on the domestic digital finance sector with an aim to create a fairer environment for competition.

The FSC has been looking into the matter for quite a time, as voices of criticism have been consistently raised against the financial regulator that the local finance industry is suffering from an uneven playing field due to regulations, compared to tech-based IT giants ― which have been threatening traditional banking companies with their extensive expansion into various sectors, including the finance and shopping industries.

Big-tech companies based on web portals or mobile messengers like Naver and Kakao have aggressively expanded into a myriad of business fields, particularly in finance, including banking, securities, insurances and payment settlements, and the nation's financial companies have argued that they are put in an unfair position, urging the government to bring the level of regulations in line with other IT-based companies.

Considering such complaints, the FSC announced that it has decided to allow the banking industry to advance into the platform business, while big-tech firms will face a thorough set of regulations in their platform business models.

With the approval from the financial authority being made, consumers could be able to use a wider variety of services like food delivery orders, shopping and real estate consulting.

The financial regulator also eased regulations regarding financial companies' acquisition of stakes in fintech enterprises.

The FSC said the set of measures came after holding a number of sessions with financial companies, fintech enterprises as well as big-tech IT firms during September and October, aiming to reflect their opinions and demands altogether.

“Fintech companies are fast growing at an overwhelming speed, and big-tech companies' advances into financial markets have been actively made, while traditional financial companies are also making all-out efforts towards digital innovation. In the process, there have been voices calling for an equal level of regulation among industries that the existing regulatory system does not appropriately reflect the fast-changing digital environment,” FSC Vice Chairman Doh Kyu-sang said.

“With the set of deregulation measures, the FSC hopes to find a new equilibrium where industries can mutually benefit as they compete and develop together.”