Launch of Kakao Pay Securities, Securities Industry Responds "Limited Impact vs Close Watch"

[Asia Economy Reporter Minji Lee] As Kakao enters the securities industry through its subsidiary Kakao Pay, attention is focused on whether it can bring new changes to the securities sector. Although its current scale is small and the immediate impact on the securities industry is limited, it is expected to grow rapidly due to its possession of a widely popular platform.

According to the financial investment industry on the 6th, Kakao Pay incorporated Baro Investment & Securities as an affiliate and changed its name to Kakao Pay Securities. The Financial Services Commission approved the major shareholder change application, stating that Kakao Pay met all legal requirements such as financial soundness, debt ratio, and the social credit of the major shareholder. As a result, Kakao Pay became the largest shareholder holding 60% of Kakao Pay Securities' shares.

Kakao Pay Securities plans to increase customer inflow through its strong Kakao Pay platform. It intends to link Kakao Money accounts to comprehensive asset management accounts (CMA) to provide services such as money market funds (MMF), stocks, bonds, and fund trading. Currently, Kakao Pay has 30 million subscribers, with a monthly active user (MAU) count reaching 19 million. The transaction volume was about 12.9 trillion KRW as of the third quarter of last year.

Sung Jong-hwa, a researcher at eBest Investment & Securities, said, “Kakao Pay will introduce a trading system linked with the existing Baro Investment & Securities comprehensive asset management account (CMA),” adding, “Based on its securities business license, it will be possible to enter various financial platform businesses.”

The securities industry expects that since Kakao Pay Securities will focus on retail operations, it will not have a significant impact in the short term. However, if the scale of customer inflow grows, it could become a threatening presence even to large securities firms.

An industry insider explained, “Looking at the revenue structure of securities firms, the larger the firm, the smaller the proportion of brokerage commissions, so it will affect some small and medium-sized securities companies,” adding, “However, if it expands its business area into those of large securities firms based on its customers, competition will intensify.”

Some also express opinions that Kakao Pay Securities may face growth limitations. This is based on the judgment that it is difficult to create a clear profit model solely from brokerage commissions. A representative from a small to medium-sized securities firm said, “Even if stock trading is done through KakaoTalk, it will be difficult to set commissions,” adding, “Even Kiwoom Securities, which has increased brokerage commission revenue based on online trading, is currently increasing investments using its own capital exceeding 2 trillion KRW.”

This content was produced with the assistance of AI translation services.