An entrepreneur’s outcryViva Republica, the operator of Korea’s popular mobile-based money wire service app Toss, hinted at giving up the pursuit of a third internet-only banking permit, citing frustrating intrusion from regulators. In an event sponsored by the Financial Services Commission (FSC), the company’s founder and CEO Lee Seung-gun accused the top financial policymaking institution of making it impossible for new entries to the internet banking business in the presence of FSC Commissioner Eun Sung-soo.
A Viva Republic-led consortium was rejected in its first bid for the third internet-only bank license in March. It is not common for an entrepreneur to voice complaints about the regulator at a public occasion arranged by the government.
Viva Republica is a rare Korean unicorn, or an unlisted start-up with valuation of over $1 billion. After the simple online wiring service Toss launched in 2015, dentist-turned-entrepreneur Lee created a splash with young people. It has been listed as the only Korean name in the top 50 global fintech leaders for two straight years. But its bid to venture into bigger banking business was turned down by regulators for its lack in the context of existing regulations. Despite the government’s promises for a regulatory sandbox or exemptions, regulations still get in the way of industrial and technology advances.
Lee said the company has spent massive money to expand to securities and the banking business by recruiting people but are on the brink of giving up due to stifling regulations. Regulations don’t just block further growth of start-ups in Korea, but also endanger their viability.
Still, the FSC remained oblivious and upbeat. It vowed to put up 300 billion won ($252 million) of funds to groom start-ups and innovations and assist their global outreach. It also said it will launch 100 new innovative financial services by next March.
If a company that built itself up with little government aid gives up further investment to advance, there is no hope for the venture industry regardless of new spending and policies as long as regulations stay intact. The government must pay heed to realistic voices from the field.
JoongAng Ilbo, Sept. 20, Page 34