5 fintech partnerships approved
Products will include unsecured and short-term loans.
According to the Financial Services Commission (FSC), the five companies were selected from a total of 15 applicants. Nine made the final cut. Viva Republica, creator of the Toss mobile payment service app, was approved.
Six were disqualified because they had already received approvals in a September round or because they dropped out voluntarily.
In the September round, 11 fintech companies were matched with major financial companies, including KEB Hana Bank and Woori Bank. The list of fintechs included Big Value, which specializes in real estate evaluation, and Aizen Global, an AI financial platform developer,
The FSC said the services provided by the fintech companies will not only speed up processes, including loan evaluations, but will also help clients qualify, especially those in their 20s who have trouble getting loans due to a lack of financial history.
Major financial institutions bring significant benefits to the arrangement.
They increase exposure to investors and consumers, and help secure larger investments, contributing to the expansion of the Korean fintech industries.
Viva Republica will work with Standard Chartered Bank Korea to provide small, unsecured and short-term loans with moderate interest rates. Toss has over 11 million subscribers, and more than 60 percent of its subscribers are in their 20s, according to the FSC.
Using subscriber financial information, machine-learning technologies will generate real-time credit scores.
This will not only reduce paperwork burden but will also provide a more accurate evaluation based on the person’s bank account, credit card spending and investment strategies.
The FSC said the total amount that can be loaned through the partnerships will be capped at 5 billion won ($4.4 million), with the maximum amount each user can borrow limited to 1 million won.
Popfunding, which is partnering with the Industrial Bank of Korea (IBK), will provide corporate loans to a maximum 500 million won per company. The loan evaluations will be based on e-commerce sales data and inventory assets. The goal is to create a niche market of mid-rate loans to small mom-and-pop businesses.
The fintech companies will provide the services for a maximum of two years.
After that, the service could be approved as a financial company or absorbed by the financial institution.
The FSC said it plans to increase the number of fintech-conventional partnerships.
The third round of applications will be accepted through May 7. Green lighted companies will be announced in early July. A fourth round of applications will be accepted between August and October, and a fifth group between Jan. 2 and March 2, 2020.
“We’re currently supporting the matchups between fintech companies and conventional financial companies through our task force, including preparing the application and consulting,” said Kwon Dae-young, head of the FSC’s financial innovation bureau. “For those selected, we’re financing some test expenses, as well as providing support, including overseas expansion consulting.”
BY LEE HO-JEONG [email@example.com]
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