Korea FinTech Observer #1

Welcome to the first edition of the Korea FinTech Observer. This is not turning into another newsletter, and it will not be quite as exhaustive as the Japan FinTech Observer, however, we hope you find it useful still. We will broadly cover the first half of March in this inaugural edition.

Banking

• The Financial Services Commission of South Korea has set out two new policy initiatives designed to further develop and expand the availability of open banking services in the country; the first initiative will see an expansion in the scope of data available to open banking across both personal and business accounts; the second initiative is seeking to make open banking available in an offline capacity, such as through bank branches
• K Bank, a neobank that has seen rapid growth thanks laregely to its crypto operations, is set to make an IPO bid; the bank reportedly has the “goal of listing on the South Korean KOSPI stock market within the year”
• To strengthen its global operations, Shinhan Bankis accelerating the development and marketing of products targeting local customers, including the launch of digital loan products overseas; Shinhan Bank Indonesia is partnering with local fintech platform company DANA Indonesiato introduce digital loan products; after signing a business agreement this month, the products are expected to be launched in April; this marks the first time Shinhan Bank is introducing non-face-to-face loan products in collaboration with a platform company in Indonesia
• JB Financial Group Co., Ltd. has partnered up with Infina, a Vietnamese financial platform operator, to expand its presence on the global stage; it said its affiliate in Vietnam, JB Securities Vietnam, signed an agreement on strategic investment with Infina; under the deal, JBSV will take over a 3.9 percent stake in Infina; it plans to pull up the stake to around 5 percent in line with the joint collaboration’s performance in the near future @jb financ
• Hecto Financial has launched its new Master Account Management Solution, comprising receivables, payables, and foreign exchange, to help businesses navigate the complexities of cross-border transactions in Korea; clients only need to obtain access to Hecto Financial Co., Ltd’s MAMS to handle pay-ins and pay-outs with local Korean partners; the payments received are matched with the expenses for specific local Korean partners who exclusively deal in KRW; netting happens exclusively within Hecto Financial’s MAMS platform; after handling all the required settlements in KRW, any remaining funds are converted into the desired currency

Payments

• NAVER CorpPay, currently the top player in the simple payment market, is gaining an advantage over its competitors, Kakao CorpPay and Viva Republica (Toss); in the previous year, Naver Pay was the first of the main payment systems, which include Naver Pay, 카카오페이 (kakaopay), and Toss Payments(토스페이먼츠), exceeding an impressive $29 billion (40 trillion won) in transaction volume
• Naver Pay is launching its Facesign Payment service at Kyung Hee University’s central Seoul campus; Facesign allows users to register their facial information using their smartphones and make payments using facial recognition, without the need for a card or smartphone; the service was previously validated at Naver‘s 1784 headquarters, where Naver employees used it to enter the company premises and log into its systems on top of making payments

Capital Markets & Asset Management

• South Korea’s financial watchdog said a probe found that some of the country’s largest brokers misrepresented risky China-linked structured products to retail investors, and it is considering remedies including penalties and a ban on sales
• The South Korean financial regulator’s new plan to shore up the stock market has disappointed investors who expected more concrete changes; the first part of the much-awaited initiative fell short of tackling the fundamental cause of the “Korea discount” phenomenon of relatively low valuations: a high inheritance tax that incentivizes large family-run conglomerates to keep stock prices low; the Financial Services Commission introduced the “Corporate Value-up Program” to encourage companies to improve their governance, shareholder returns and capital efficiency, taking a chapter out of Japan’s playbook
• 토스증권 (Toss Securities), a brokerage arm under financial technology giant Viva Republica, shared its vision to become a leading player in the Korean retail trading market, launching new services ranging from bonds to derivatives to diversify its portfolio

Digital Assets

• South Korea is gearing up to launch its crypto management system in 2025, just in time for the implementation of the country’s crypto gains tax in January of the same year; the country’s National Tax Service (NTS), which oversees the system’s development, aims to have it fully operational to ensure compliance with the new tax regulations
• The “Kimchi Premium” is back; it was first observed in 2016 and spotlighted in a 2019 paper from the University of Calgary; according to the researchers, between January 2016 and February 2018, South Korean Bitcoin exchanges witnessed an average of 4.73% higher prices than exchanges in the United States
• DeSpread partners with Arbitrum to build developer ecosystem in South Korea; as part of this collaboration, DeSpread is poised to deliver comprehensive research contents and development guides in order to pave the way for Arbitrum’s prominence in the Korean market and alleviate language and cultural barriers for local developers
• Jeju Island, an autonomous region situated off the coast of South Korea, is eyeing the adoption of NFTs to rejuvenate its local economy, seeking growth in tourism, agriculture, and the fishing industry; the island, which enjoys a degree of legal independence, is actively envisioning becoming an “NFT city” as a catalyst for economic advancement