Big Tech vs Financial Sector: Endless Clashes... Is There a Solution?

Rising Conflicts Between Big Tech and Financial Sector Over Debt Refinancing Platforms
Experts Say "Applying Same Regulations to Same Functions Is the Solution"

[Asia Economy Reporter Jin-ho Kim] There is no sign of resolution in the conflict phase caused by the 'clash' between big tech (large information and communication companies) and traditional financial sectors. This is due to their sharply conflicting interests in vying for leadership in the new financial environment. The financial sector is protesting that excessive privileges are being granted to big tech, while big tech counters by accusing the financial sector of selfishness that neglects consumer benefits.

The background of the endless conflicts, from refinancing loan platforms to controversies over the Electronic Financial Transactions Act amendment and recently the dispute over commission rates, is attributed to the financial authorities' 'big tech favoritism.' Experts advise leaving the market to autonomy but emphasize that the solution lies in the principle of 'same business, same regulation' regarding regulation.

According to the financial sector on the 18th, the biggest clash between big tech and the financial sector is over refinancing loan platforms. Refinancing loan platforms are expected to have considerable ripple effects because they allow easy and convenient loan switching. Given that the scale of household loans reaches about 1,800 trillion won, fierce interest rate competition could enable one financial company to steal the 'home base' customers of another.

However, the existing financial sector is reluctant to participate, citing that the platform leadership lies with big tech. There are concerns that by offering high commissions, the platform might degrade to merely providing product procurement functions. Therefore, the financial authorities have currently postponed discussions on refinancing loan platforms.

The conflict between existing financial companies and big tech (large information and communication companies) and fintech over easing entry barriers into financial services has also failed to find a solution. The traditional financial sector opposes the passage of the amendment to the Electronic Financial Transactions Act, pointing out the introduction clause of the comprehensive payment business license.

The financial sector argues that if this bill passes, big tech will effectively engage in deposit and loan businesses such as account issuance, fund transfers, and payment of card bills and insurance premiums, without being subject to the same level of regulation as financial companies. Big tech industries, however, consider these concerns exaggerated.

Recently, controversy has also erupted over payment commission rates. According to Kim Han-jung, a member of the National Assembly's Political Affairs Committee from the Democratic Party, the commission rate applied to small business owners with annual sales under 300 million won is 0.8% for credit cards, while Naver Pay's order-type payment commission is 2.2%, nearly three times higher. This has raised questions about the fairness between credit card and big tech commission rates.

Experts point out that the controversy originated from the financial authorities' favoritism, allowing big tech to avoid regulatory costs and obligations while enjoying the benefits of existing financial institutions. The absence of the 'same function - same regulation' principle has led to this situation. Professor Min-hwan Lee of Inha University's Department of Global Finance stated, "Big tech's behavior of entering systems created by financial institutions and profiting in the middle may appear beneficial to consumers in the short term, but ultimately, it can cause harm through preferential treatment," adding, "It is appropriate to apply the same regulatory principles to the same business."

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