FSC gives itself high marks, in tech especially

The Financial Service Commission (FSC) Monday ticked off its achievements over the past two years, emphasizing especially the good work it has done in terms of financial technology development.

It said its efforts in internet-only banking have resulted in a healthy expansion in the new sub-sector, with 20 percent of Koreans having an account at one of these new institutions.

K-bank, the first internet-only bank, was opened in May 2017, followed by Kakao Bank two months later.

The FSC said the online banks have helped raise competition among the existing banks, pushing up deposit rates, lowering loan rates and driving down commissions, such as wiring charges.

The FSC cited a case in which a businessman who lost his business was able to borrow in the 7-percent range. A person was able to save on making wire transfers to a child studying overseas.

Online banks have helped create over 5,000 jobs, the commission claims. Direct hiring is roughly 1,000, and indirect hiring, including research and development, totals 4,000.

Fintech companies have also benefited from government support.

The revenue of Bankware Global has increased 70 percent over the past two years as it worked with K-bank on setting up an IT system. The company was able to double the number of employees and won overseas orders in the Philippines and Japan.

As of 2018, Korea has 303 fintech companies, up from 264 from 2016 and 288 in 2017.

With the growing number of fintechs, mobile transactions, including payments, have grown substantially. In the first half, 363.3 billion won ($311.8 million) of mobile transactions were made, including 162.8 billion won in payments. That’s up from 230.5 billion won in 2018.

The FSC also noted that since it started allowing for regulatory sandboxes in April, it was able to give the green light on a total of 60 new financial services, which accounts for roughly 40 percent of the innovative services that were approved by the government.

It said among the 60 sandboxes, 15 are already in service in the market while 36 are expected to be commercialized this year. They have been able to create 225 jobs and collect 120 billion won in investment.

The FSC also emphasized its efforts over the last two years to encourage the development of “inclusive” financial products.

It noted that it lowered the maximum interest rate on loans from 27.9 percent to 24 percent, lowered the rates on credit cards and supplied 46.4 trillion won of financial products for the lower-income households.

The FSC will continue to focus on further fueling innovation and competition in the financial industry. It will allow for additional online banks and expand open-banking services, while continuing to support the fintech industry through the reform of private information laws.

It also noted that it will continue to strengthen its monitoring of financial products that are high-risk, high return, hinting at the recent debacle involving derivative products sold at Woori Bank and KEB Hana Bank.

“We will manage preemptively against internal and external risks, such as heavy investment in high-risk, high return financial products at a time of low-interest rates,” said an FSC official.

BY LEE HO-JEONG lee.[hojeong@joongang.co.kr]