[Bank of Korea Financial Stability Report] Non-face-to-face Financial Transactions Increased 12 Times Compared to 2016

[Asia Economy Reporter Eunbyeol Kim] Non-face-to-face payment transactions, which have become active due to the spread of the novel coronavirus infection (COVID-19), have increased 12 times compared to 2016. As more people use non-face-to-face methods such as mobile devices to obtain credit loans, the scale of non-face-to-face credit has also surged more than sixfold.

According to the "2020 Second Half Financial Stability Report" released by the Bank of Korea on the 24th, the payment sector among non-face-to-face financial transactions increased 12 times compared to 2016. The payment sector showed a particularly large increase compared to other financial transactions such as credit, deposits, securities, and insurance. A Bank of Korea official explained, "Due to the spread of COVID-19, e-commerce such as online shopping has expanded, leading to a significant increase in simple payments by card companies and fintech (big tech) firms."

As loans have rapidly moved online, financial transactions have grown about 6.6 times compared to 2016. In the securities sector, non-face-to-face stock trading surged more than threefold during the stock market recovery after COVID-19, and in the insurance sector, which traditionally had a high proportion of face-to-face sales, non-face-to-face subscriptions expanded mainly in non-life insurance.

The Bank of Korea stated, "Non-face-to-face transactions provide consumers with convenience and diversity in financial services, reduce costs, and promote financial innovation, resulting in significant positive effects." However, it added, "It is necessary to be cautious about the negative impacts on financial stability as non-face-to-face transactions rapidly expand, causing major changes in the existing financial industry structure."

Representative side effects include vulnerability to cyber operational risks and financial consumer protection, the potential increase and deterioration of household debt, and concerns about the decline in financial institutions' soundness due to intensified competition.

The Bank of Korea emphasized, "It is necessary to strengthen risk management proactively by monitoring domestic financial industry changes, fintech-related international discussion trends, and major countries' response cases."

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