Aton, Easy PIN and Fingerprint Authentication... No Worries About Strong Security

Transfer Limit Raised to 40 Million Won
Fintech Security Sales Increase by 32%
Maintenance and Platform Business Also Profitable
Subsidiaries Struggle, Investment Capacity Ample

With the revised Electronic Signature Act coming into effect on the 10th, the public certification system will relinquish its monopoly after 21 years. Discussions about abolishing the public certification system began in 2014 with the so-called ‘Cheon Song-yi Coat’ incident. When the drama My Love from the Star gained popularity in China, many Chinese tried to purchase the coat worn by the female lead Cheon Song-yi from Korean online shopping malls, but were blocked by the requirement to install ActiveX, preventing the purchase. This incident made the public certification system a target of criticism, ultimately leading to its abolition. Going forward, the public certification system will be renamed ‘Joint Certificate’ and will compete with various private certification services. This is why technologically advanced private online and mobile security companies and payment service providers are gaining attention. Asia Economy analyzed NHN Korea Cyber Payment and Aton, which are expected to lead the ‘post-public certification’ era.

[Asia Economy Reporter Jang Hyowon] Fintech security company Aton is gaining attention following the news of the abolition of the public certification system. Aton possesses technology that allows authentication via password or biometric recognition without the need for a public certificate. This is why it is expected to expand further into financial institutions and fintech companies after the public certification system is abolished. Along with technology, approximately 40 billion KRW in reserved cash raised through a public offering is expected to be a growth driver for Aton in the future.

◆ Fintech Security Solution to Replace Public Certification = Aton is a mobile authentication specialist company based on Secure Element technology. While traditional mobile security improved security by using external devices separate from smartphones, Aton’s fintech security solution achieves a high level of security without separate devices through a special secure space within the smartphone.

By applying Aton’s technology, authentication can be done using a 6-digit PIN or fingerprint without complicated procedures such as public certificates, OTPs, security cards, or phone/SMS verification. Despite this, the security level remains high. For example, if the transfer limit with a public certificate at a financial institution was 10 million KRW, with Aton’s technology, the transfer limit can be raised to 50 million KRW.

Aton’s main revenue comes from providing fintech security solutions to financial institutions and fintech companies. As of last year, 46.2% of Aton’s revenue was generated from the fintech security solution sector. This was followed by fintech platform services (14.0%), T-money solutions (17.2%), and smart finance (11.6%).

As of the third quarter on a separate cumulative basis, Aton’s revenue and operating profit were 17.4 billion KRW and 2.2 billion KRW, respectively. These figures represent decreases of 17.8% and 23.4% compared to the same period last year. The decline in revenue from the T-money solution sector was due to reduced mobility caused by the COVID-19 pandemic.

However, revenue from the fintech security solution sector grew by 32% year-on-year. This is because new customers are increasing ahead of the abolition of the public certification system. This sector’s revenue has shown an average annual growth rate of 25.5% over the past three years.

When Aton signs contracts to provide fintech security solutions to clients, it can expect not only license fees but also future maintenance revenue. Once a client is secured, a steady revenue stream is generated. The company explained, “Aton’s main clients were large banks and securities firms, but recently inquiries from small and medium-sized financial companies have increased, including contracts with mid-sized securities firms.”

Aton’s fintech platform business sector is also noteworthy. Aton is an electronic signature joint partner of the mobile phone identity verification platform ‘PASS’ operated by SKT, KT, and LG Uplus. Additionally, Aton directly operates LG Uplus’s PASS platform. As a result, Aton’s fintech platform revenue reached about 4.6 billion KRW last year, a 196% surge compared to 2018. This year, revenue of approximately 4 billion KRW was achieved by the third quarter, indicating promising growth.

Furthermore, Aton plans to expand additional services through the PASS platform. Currently, it provides securities and fund-related additional services, and plans to offer financial brokerage services, secure mobile login, and provide market price information and sales channels for PASS Auto in the future.

◆ Subsidiaries Are ‘Investing’ = While Aton’s main business is growing, its subsidiaries and investee companies are struggling. Aton has a subsidiary called Aton Mobility, which provides used car information services and related development contracts. Aton Mobility operates the car B2B platform ‘Car Manager’ used by used car dealers. As of the third quarter this year, Aton Mobility recorded 2 billion KRW in revenue and a net loss of 1.2 billion KRW.

An Aton representative said, “Aton Mobility focused on developing the Car Manager platform last year, and this year investment has continued with efforts to enhance the program. We plan to apply Car Manager’s data to ‘PASS Auto’ to create synergy.” The platform enhancement work is expected to continue until next year.

Additionally, in October last year, Aton established ‘Moving’ through a joint venture with logistics IT platform company Barogo and two-wheeled vehicle manufacturer KR Motors to enter the mobility fintech business. Aton holds a 25% stake in Moving. Moving recorded a loss of 400 million KRW by the end of the third quarter.

However, Aton’s investment capacity is relatively ample. This is because the 30 billion KRW raised through its listing on the KOSDAQ market last October is mostly held in financial products or cash equivalents. As of the end of the third quarter, Aton’s cash equivalents amounted to 40 billion KRW. With a debt ratio of 13.6% and total borrowings of 2.3 billion KRW, cash equivalents far exceed borrowings.

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