People say that we are living in the world of convenience, especially when it comes to using the internet. The manual tasks that used to be done offline are now completed online. However, inconvenience exists within such convenience. When we buy products online and undergo financial transactions, there are too much information and numbers required to insert in order to clinch the deal. In response to such dissatisfaction, companies in the field of Fintech have started to mark their existence by providing tech-savvy ways to complete financial transactions quickly and securely.
Today, the academia is aiming for interdisciplinary approach in which a particular topic can be understood in relation to other field of studies. Behavioral economics, evolutionary psychology, and financial engineering are some examples to name a few. For such studies, the fusion of two different subjects creates a synergy effect and consequently opens up infinite possibilities to the academia and the society. Expanded knowledge and innovative results of fusion studies are significant because it aggregates academically strong components, and it complements each other. Thus, fusion of ideas is one of the ways that intellectuals can use to make a breakthrough.
Scholars and intellectuals carry out interdisciplinary studies, but there are practical applications in corporate sense as well. Financial service called Fintech is an economically valuable service that incorporates technology and financial transaction. The word “Fintech” is a compound word that combines the word “financial” and “technique”. Fintech provides services where financial tasks such as mobile payment, sending money, crowd-funding and asset management are made easier through the use of up-to-date technology existent in the current market.
Corporations’ movement towards Fintech is a reflection of responding what people want, and what is available. People crave efficiency. The internet has become a virtual space where all sorts of economic, social and even political procedures take place. Among that, economic activities such as buying and selling goods, sending and receiving money, and investing asset are done within cyberspace. In doing this, efficiency comes from not having to physically visit places to complete the task and getting things done at any time and place. Since Fintech is a fusion of IT and financial sector, types of Fintech service differ according to which sector makes the access approach.
One is the case of IT industries expanding their business to the financial sector. This includes new method of payment, where more efficient paying services employ measures other than bank account or credit card. Also, it saves time and money in transferring money and managing one’s asset on the internet. The service does it by minimizing commissions and creating an optimal portfolio for each customer by collecting their information before transaction. Foreign IT industries such as Amazon, Ebay, Google, Facebook and Alibaba are teaming up with the financial sector to reinforce their competitiveness.
There is other case in which Fintech companies advance to payment businesses. Unlike the prevailing payment system that required users to insert myriads of information such as credit card number, passwords, personal information, Fintech corporations have vastly shortened the process. Now, credit card information is already saved, and passwords are verified through finger prints. In fact, iPhone 5S first introduced finger scan sensor which enables the verification system, and iTunes’ payment system is based on saved credit card information. As such, financial transactions reflecting Fintech services are already out in the market and readily used by many.
While industries around the world are quickly adopting the Fintech approach to their financial service models, the implementation of Fintech models are not as active in Korea compared to other countries. The most active form of online financial service is electronic wallets, as Korea’s three main telecommunication businesses provide electronic wallet services. However, such services mainly focus on the management of membership points or credit card usage points and are far from extending its service to actual payment. So far, one of the few Fintech services in the domestic market is a simple mobile payment service called ‘Kakaopay’ that was recently launched in September. Whether it succeeds or not is something to keep an eye on.
Why is Korea falling behind the field of Fintech
The main reason why Korea is slow in catching up with the Fintech fever despite being a powerful IT nation is because of its out-of-date, conventional financial regulation of the government. That is, because of government regulation, it is difficult for non-financial companies, in this case, IT industries, to autonomously develop financial services. For example, in order for companies to save credit card information, they have to gain permission from the card company licensee. Seen from such regulation, companies lack independence when it comes to expanding their service to finance.
In an interview with professor Park Jin Gwan of Korea University (KU)’s Business School, he explained the reason why regulation in the financial sector is especially strict. “As can be observed from previous financial crisis, changes made in the financial industry have direct and extensive ripple effect. Because of that, it is natural for the government to apply conservative policies like the financial investment permission policy.”
Park stated that Korea’s financial business only has limited possibility when their opportunities are blocked by government regulation. In using authorization certificate, consumers, banks, and other internet enterprises think that the government notarizes them. By using this, and doing the least they could do to live up to the standard of financial security, the government is giving a false imagination that the current status of financial security is perfectly safe and needless to refine. For this reason, when problems occur, companies increasingly blame the government, the security guide become more complex, and companies do not make efforts to develop safer and improved service.
What do we do?
It is not easy for Korea to make great improvement in the Fintech industry, since the betterment requires a fundamental change in government policy and the corresponding adaption of companies. It would be ideal if the government takes the initiative in fixing security guidelines to a more convenient one. However, it is realistically meaningless to expect that the government will do by keeping pace with the advent of cutting-edge mobile and internet technologies.
At this point, Professor Park suggested a solution that seems more plausible: to entitle financial corporations with autonomy to form their own security policies, but demand them to bear the responsibility of solving security problems. This way, companies will invest in technologies that can strengthen their security, or it will lead to the development of professional companies that specialize in providing such necessary information.
People say that Korea is falling behind in providing financial services combined with IT, which is equipped with efficiency. However, famous Fintech service providers such as Google Wallet, Buybutton and Applepay are still at the starting stage. This means that Korea also has a chance in opening possibilities. It may need gradual changes, and considerable patience to see improvement, but like many people say, the first step towards success is to accept there are problems and it is from this point where people see possibility.
▲ Companies involved in Fintech industry. Provided by medium.com.