[Reporter’s View] The National Assembly Even Holds Back Moon Government’s 'First Financial Innovation'

[Asia Economy Reporter Kangwook Cho] At the end of last year, the news that Google, the world's largest portal company, partnered with Citigroup to launch a bank account service capable of issuing checks struck the global financial and IT markets. Facebook introduced 'Facebook Pay,' a simple payment service usable on social media. Apple directly launched the 'Apple Card' in collaboration with Goldman Sachs. Amazon entered the financial business with services such as 'Amazon Pay,' 'Amazon Cash,' and 'Amazon Lending,' leveraging its vast data. As global IT giants entered traditional finance, a war began to seize leadership in the 'Techfin (technology-based finance) era.'

Domestically, K Bank, involving the representative IT company KT, made a spectacular debut in April 2017 as the first internet-only bank. Three months later, Kakao Bank opened its doors and, within two years of its launch, surpassed 11 million subscribers, becoming synonymous with internet-only banks. The government also anticipated an era where finance and technology would compete for dominance and has long advocated for fintech and techfin activation through the convergence of finance and ICT technology.

However, reality was different. Currently, K Bank is in a de facto 'closed' state with new loans completely halted due to a lack of capital. This is why the IT industry, including KT, eagerly awaited the passage of the revised bill.

On the 4th, after twists and turns, the revised bill passed the National Assembly's Legislation and Judiciary Committee, seemingly fulfilling a long-cherished wish. But the situation reversed the next day. The bill was rejected in the plenary session of the National Assembly, dashing the opportunity for ICT companies to lead techfin. Large ICT companies advocating financial industry innovation, including K Bank, were frustrated. K Bank had to shelve various new businesses and innovative services it had prepared once again, and even its overseas business faced the risk of being halted. Concerns grew that companies like Naver and Kakao would also be adversely affected in their financial businesses.

Domestic internet-only banks were born as a 'special law (特例法)' with the purpose of 'activation,' opening a path for ICT companies to enter banking. It was a product born from the urgent need not to fall behind in an era of 'heterogeneous convergence' and 'alliances and mergers' among industries where boundaries are breaking down. However, barriers remain high. While still bound by the long-standing 'major shareholder qualification restrictions,' domestic ICT-based 'financial innovation' is retreating. In contrast, Southeast Asia's largest ride-hailing and sharing service company, 'Grab,' has rapidly grown into a fintech powerhouse by actively entering digital banking. Unlike Korea, the government authorities there have provided ample opportunities for service activation and relaxed regulations while listening to field voices.

Yoon Jong-kyu, Chairman of KB Financial Group, said at the 16th anniversary ceremony of KB Kookmin Bank in 2017, "In the future, the bank's competitors will be Google and Amazon." The 20th National Assembly is effectively ending in April. There is a possibility of one or two meetings before the Assembly concludes. This is the last chance to face the reality that global IT giants, under the banner of 'financial empire,' are swallowing the global financial market and to reflect on whom the politics will serve.

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