Naver and Kakao, two of the largest online service providers in South Korea, are taking steps into financial services, pushing financial institutions (FIs) to better meet FinTech needs, according to The Korea Herald. Regulators now have the task of deciding whether to write rules that are fair to both.
Naver Financial, a provider of bank accounts, stocks, and credit cards that operates a mobile payment service for eCommerce transactions, began offering loans to small businesses with Woori Bank last year. Naver recently said it may seek permission to issue credit cards and insurance.
At the same time, KakaoPay, a mobile payment and digital wallet service by South Korea-based Kakao, said it is planning to introduce insurance services this year in cooperation with Meritz Fire & Marine Insurance. The firms are developing financial products for customers between ages 30 and 50.
These moves come as FIs are competing with rival tech giants or collaborating with new players to survive in the evolving sector.
Shinhan Financial Group, one of the country’s largest banks, recently hired a former IBM managing director as its digital chief officer to expand its digital services.
Regulators have faced criticism for being soft on tech firms and grappled with whether to implement rules to even the platform for companies engaging in FinTech services.
Without providing specifics, the Financial Services Commission (FSC), the South Korean government agency with statutory authority over financial policy and regulatory supervision, last month said it plans to better manage and regulate risks related to Big Tech companies while strengthening consumer safeguards for digital services.
In a speech last week, FSC chief Koh Seungbeom said the agency will help tech firms expand FinTech services as long as they bring innovation and competition.
“But we will make sure regulations are in place to protect financial stability and consumers,” he said.