Despite Late Start, South Korean Fintechs Are Making A Mark

Fintechs receive virtual patronage from the country’s regulators:

- Mohan

It was in 2015 that South Korea formally recognized the relevance of fintech ecosystem when the country’s regulator, the Financial Services Commission (FSC), sanctioned 3 trillion won (roughly $2.6 billion) to assist fintechs that have sound ideas. Subsequently, in March 2018, the country’s government allowed fintech startups to introduce new products and services without having to comply with existing regulations. The exemption is for a period of 2 years. Now, the FSC is proposing to introduce new regulations to assist the fintech industry helping them launch new technologies, payments systems, blockchain -based products, etc. When compared to fintech startups in the US or China, South Korea is still at the nascent stages. The segment as a whole had around $87 million in total transaction value in 2018 and 45 million users. But the country today has an estimated 400 fintech companies. Some of them have global presence.

There are several factors that ensured a promising fintech ecosystem in South Korea. The most important among these is the fact that today the fintech segment does not have any regulations. Initially, the FSC had enforced certain changes to help fintech startups in their operations but some of the exhaustive requirements prevented new entities from entering the market and gave some established firms a sort of monopoly. But, now the FSC has mooted a regulatory sandbox allowing startups to introduce new products and services without the need to comply with existing regulations. Under this policy, the FSC will determine if companies can be exempted from regulations. If their apps or services are deemed ‘innovative’, they will be free from regulations for up to 2 years.