[INTERVIEW] 'Fintech businesses yield both innovation and inclusion'

Lee Keun-ju, Chairman of the Korea Fintech Industry Association (KORFIN), speaks during an interview with The Korea Times at his office in central Seoul. Korea Times photo by Choi Won-suk

Fintech association leader calls for removal of regulatory uncertainty and opening up direct communication channel

By Anna J. Park

As the country's financial industry is fast shifting towards digitalization amid the pandemic, the fintech sector has been leading the transformation from the center of the tide. The fintech industry can contribute to social welfare amid this change, according to Lee Keun-ju, Chairman of the Korea Fintech Industry Association (KORFIN).

"The fintech industry can contribute to social welfare, as it creates both inclusion and innovation in society. Fintech firms provide financial inclusion to those who were previously excluded from traditional financial companies, and they also achieve innovation while expanding the market and benefiting consumers," Lee highlighted during an interview with The Korea Times.

Lee, who's also a CEO at Korea Easy Payment Foundation (KEPF), has been leading the association of fintech firms since early this year. Lee is the association's fourth chairperson with a two-year term, but actually he's one of the core founders of the association.

Lee started his career at the Industrial Bank of Korea (IBK) as a banker, yet soon turned to be the state-led lender's IT programmer, as he realized that IT technology and digitalization would forever change the nature of banking business practices. He spent the 1990s and the 2000s at the bank, developing the firm's IT networks both in Korea and in its New York branch.

It was in the early 2010s when he was leading the bank's smart finance team that he encountered the country's burgeoning fintech industry.

"I realized then that the tide of the fintech industry is something that cannot be stopped or obstructed by the traditional banking sector. As it was a huge trend and change on a global scale, I thought banks should take a proactive approach of establishing a win-win relationship with fintech firms," Lee explained.

Under his leadership, the IBK pursued active partnerships with fintech firms at that time, one of which included cooperation with Toss, now a decacorn financial platform company.

It was during this period that Lee realized the necessity of setting up a business association of fintech firms to respond jointly to the presidential administration and the parliament and make their voices heard. He prepared for the launch of the association from late 2015 and it finally kicked off in April 2016 with around 130 fintech firms. Lee served as the association's first secretary general for three years, until he assumed a chief position at KEPF in 2018.

Now, the number of members in the association has grown to some 360, ranging from big tech firms to small-sized startups. Thus, Lee's job of delivering the association's voices jointly to the government and the parliament isn't easy, as the group entails a variety of different corporations.

"As the core of the fintech industry is about unbundling traditional financial services, there are a wide range of different kinds of fintech firms. Thus, the association operates nine sub-committees, such as payment, wiring, robo-advisory and more, to fairly listen to the member companies' demands and voices," Lee said.

As it is natural for these firms offering different services to have various interests, Lee stresses the importance of effective communication.

Despite their differences, Lee explained that big tech firms and startup fintechs have a common motivation to strengthen their partnerships, as both sides could enjoy the benefit of expanding their own channels.

"In the end, it's a win-win relationship. The relationship between the fintech sector in general and the traditional financial industry is the same; by cooperation, they can grow their own scope of influence and the impact of their own channels," he highlighted, explaining that small companies could secure access to a huge group of customers by partnering with big tech firms, while big tech firms or banks also need innovative services to meet the needs of their customers.

While he appraises the local fintech industry as having world-class creativity, technology and capacity, he expressed regrets over the local legal framework that is outdated.

"Domestic laws and regulations are very fragmented, not comprehensive at all, regarding the fintech industry," Lee said.

He further explained that legal experts also highly criticize domestic laws affecting the fintech sector for being outdated, as the legal frameworks aim to define business items that are allowed. Rather, the rules should be written in a way that states what is not allowed, leaving the creative space for the fintech industry's innovative services to grow.

"While there are a bunch of great innovative ideas, regulatory uncertainty hampers further growth of the industry," he said.

Lee also urged the government to open up a direct channel to listen to the voices of small- and medium-sized fintech firms and spur further innovation among them.

"Currently, the Financial Services Commission (FSC) holds a meeting with big tech firms and digital banks, listening to their voices. But there's no such chance for small-sized and startup fintech firms. The fintech association is the only official channel through which their voices can be delivered to the financial authorities," he added.

"Of course we also try to deliver their voices and opinions to the financial authorities. But we hope the new administration pays attention and listens directly to these small yet innovative companies' demands and voices on a regular basis, so that the government can nurture a proper environment for the further development of the fintech industry," he stressed.

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