First Step Taken in Fair Competition... 'Bank VS Big Tech' Stalemate "Only Confirming Differences in Position" (Comprehensive)

Son Byung-du, Vice Chairman of the Financial Services Commission, is delivering opening remarks at the 1st Digital Finance Council held on the 10th at 'Front1' in Mapo-gu, Seoul. The meeting was conducted online in consideration of social distancing due to the novel coronavirus disease (COVID-19).

[Asia Economy Reporter Kangwook Cho] "We only confirmed the differences in positions. Future agreement is expected to be difficult."

This was the comment of a financial sector official who attended the first meeting of the newly launched 'Digital Finance Council' yesterday, established to resolve the controversy over the 'tilted playing field' between financial companies and big tech. At the meeting, both sides expressed hope that "this council will serve as a smooth communication channel among stakeholders and that we will mutually strive to create reasonable standards," but showed a tense atmosphere with no concessions regarding each other's claims.

According to the financial sector on the 11th, the first meeting of the 'Digital Finance Council' was held yesterday at Front1 in Mapo, Seoul, chaired by Sohn Byung-doo, Vice Chairman of the Financial Services Commission. The meeting was held online and attended by Vice Chairman Sohn, Kim Geun-ik, Senior Deputy Governor of the Financial Supervisory Service, and from the financial sector, Han Dong-hwan, Deputy CEO of Kookmin Bank, Jung Joong-ho, Director of Hana Financial Research Institute, and Cho Young-seo, Vice President of Shinhan DS. From the big tech side, Ryu Young-jun, CEO of Kakao Pay, and Choi In-hyuk, CEO of Naver Financial, also participated.

Both sides showed a positive response to the establishment of a forum to prepare principles for fair competition. Both financial companies and big tech agree on the principle that a fair competitive environment must be created. However, clear differences in perspectives from their respective viewpoints were revealed.

An official from Financial Company A said, "The financial sector does not want to slow down the pace of innovation or impose unnecessary regulations on fintech companies," but pointed out, "In the process of going down an 'untraveled path,' 'policy goodwill' often leads to unintended consequences."

In response, an official from Big Tech Company B said, "If the financial sector and big tech only argue from their own positions, it may be difficult for discussions to progress," and emphasized, "In this case, it is necessary to prioritize judgment from the perspective of consumer welfare."

The council is planned to operate as a financial sector 'hackathon'?an event where participants form teams within a limited period to continuously generate ideas and produce results?engaging in intense debates on all issues raised so far. The Financial Services Commission aims to prepare alternatives and announce them externally by the end of the year.

However, after the meeting, both the financial sector and big tech agreed that future consensus would be difficult. An official from Financial Company C who attended the meeting explained, "At the site, the authorities encouraged smooth information sharing between parties, hoping for a quick agreement," but added, "From the banks' perspective, if big tech does not provide detailed information, it is difficult to create customized products and services using that information, so banks have no choice but to insist on the principle of reciprocity in information provision."

Another official from Financial Company D stated, "Banks must obtain approval from authorities within the legal framework, so their path to new business entry is blocked, but authorities are effectively allowing big tech to enter the financial industry," and argued, "From the banks' standpoint, having nothing more to lose, if big tech does not concede to disclose richer information, there is little room for agreement."

In response, an official from Big Tech Company E said, "The financial sector talks about 'same function, same regulation,' but I want to clear up the misunderstanding that the amendment of the Electronic Financial Transactions Act could create a tilted playing field," and added, "We will work together to create reasonable standards and agreements that can expand the playing field."

The financial authorities have set the principle of 'same function, same regulation.' However, the problem is that it may be difficult to mechanically determine whether the functions are the same. For example, it is not a simple matter to consider a company providing small payment functions as equivalent to existing large financial companies.

An official from the financial authorities said, "We will carefully examine whether applying the same regulations as existing financial companies ultimately aligns with the interests of financial consumers, that is, whether it conforms to the principle of maximizing consumer benefits by promoting healthy competition within the financial market," and added, "From this perspective, finding a balanced solution is important."

The financial authorities plan to hold the 'Digital Finance Council' every 2 to 4 weeks to discuss practical alternatives on various topics. They also intend to continue operating the council as a platform for ongoing discussions related to digital finance beyond this year.

Vice Chairman Sohn said, "We will continue regulatory improvements to promote financial innovation in the digital era and establish a sound competitive order among market participants to create a foundation where consumers can safely enjoy the benefits of digital finance," and added, "We will also review risk factors related to financial market stability as well as the impact on the digitally marginalized and society as a whole."

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