[The Editors' Verdict] The Impact of Fintech Companies Entering the Market

Recently, many startups and fintech companies have emerged across various industries. While early domestic adoption of IT-integrated companies focused on payments, the scope has recently diversified. It now includes remittances (electronic money, mobile/email transfers), payments (electronic money, simple payments), asset management (online funds, internet-only banks, internet insurance, online securities firms using robo-advisors), investments (social trading, crowdfunding), security (information security, payment security), data analysis (financial big data analysis), and even proptech. Additionally, new technologies and sub-industries integrating these technologies have also emerged.

Various systems have been significantly improved and changed to support the growth of these companies. There are developments in technology development and tax support, changes in laws, and the introduction of new laws. However, the most important point is that the growth of these companies and changes in regulations are related to the lives of the public. For example, it is good if a company enters the market through regulatory changes enabled by new technology and thrives after entry. However, increasing market share and then raising prices in a near-monopoly state causes harm to the public. In such cases, even if it is somewhat inconvenient initially, it is necessary to nurture existing companies to create similar competition.

Fintech and big tech companies that have already entered the market must follow the same regulations as the industries they enter. Problems arise when companies approach finance with a business mindset alone. Finance fundamentally focuses not only on sales but also on risk management. Financial system failures affect not only the country but also other countries. Therefore, there are various regulations worldwide, and some regulations apply only domestically.

The recently controversial Merge Point case is similar. Although the amendment to the Electronic Financial Transactions Act (EFT Act) has not yet passed, revisions require that a certain portion of prepaid electronic payment funds be held by external financial institutions to protect consumers and prepaid funds. Broadly speaking, this also relates to the role of capital. Companies in that industry must follow the rules of that industry. If a financial company with 3 billion KRW in capital manages 200 billion KRW, problems arise immediately. Also, although initial loan interest rates were low, rates may increase after market share rises. Since capital procurement is cheap and administrative expenses are low, there is no reason for higher additional interest rates. This is why loan regulations and net interest margins are closely monitored.

There are also industries where fintech companies have entered or hope to enter the market. For example, real estate brokerage. Apartment prices in Seoul have risen 2 to 3 times since 2017. Since brokerage fees are applied as a percentage, fees have risen accordingly, making it harder for ordinary citizens. Existing licensed brokers have conducted joint brokerage through private internal joint transaction networks such as MySpider, Nalgae, and Ten, charging members tens of millions of KRW. If one of 2 to 3 licensed brokers in an apartment complex acquires a monopoly, newly established brokers become isolated. In a market with fixed supply, suppliers raising prices and corresponding fee increases create incentives to raise housing prices. For such cases, it is necessary to revise related laws or allow existing fintech companies to boldly enter, switching from a percentage-based fee system to a fixed-fee system. Related regulations should be relaxed similarly to those in finance.

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