Delayed Debt Consolidation Platforms... Uncertain Prospects for the First Half of Next Year

Release Planned for This October Delayed to Next Year
Due to Authorities' Strict Loan Regulations
Banks and Internet Banks Gradually Halt Loans

[Asia Economy Reporter Seong Giho] The financial authorities' plan to launch the "debt refinancing (switching) loan platform" in October has ultimately been scrapped for this year. This is due to unresolved differences between traditional financial institutions and the fintech industry, as well as the authorities' full focus on managing household loans. With commercial banks and internet-only banks also suspending loans to control the total volume of household loans, it is expected that the platform's launch will not be easy even in the first half of next year.

According to financial authorities and the financial sector on the 8th, the Financial Services Commission recently held meetings with the Korea Federation of Banks, the Credit Finance Association, and the Korea Federation of Savings Banks, among others, regarding the refinancing loan platform, and agreed to postpone the infrastructure establishment to next year. Given the strong opposition from banks over concerns of "Big Tech (large information and communication companies) dependency" and the need to coordinate positions among the industry, it was realistically judged that an October launch would be difficult.

The refinancing loan platform is a service that allows users to compare and switch loan products from financial institutions through a mobile application (app). It operates by connecting the Financial Payment Service's "loan transfer infrastructure," which enables non-face-to-face cancellation of existing loans and execution of new loans, with fintech companies' "loan comparison platforms" that aggregate and compare loan products from various financial companies.

However, during discussions, the platform was effectively stalled due to strong opposition from banks citing platform dependency and high commission rates. Financial Services Commission Chairman Ko Seung-beom stated shortly after his appointment that "we will have sufficient consultations without being bound by the reconsideration deadline."

Recent high-intensity household loan regulations by the financial authorities have also delayed discussions. As banks have been suspending loans or continuously reducing limits as part of household loan management, the effectiveness of the refinancing loan platform is gradually diminishing.

Earlier, NH Nonghyup Bank completely suspended household real estate loans in August. Woori Bank and KB Kookmin Bank have been limiting loan quotas by branch. Kookmin Bank and Hana Bank have temporarily suspended refinancing loans for some products such as credit loans and mortgage loans. Hana Bank plans to suspend loan sales through six loan brokerage firms from November to December. Internet bank KakaoBank has declared suspension of overdraft loans, credit loans, and jeonse deposit loans, while the mutual finance institution Suhyup has announced suspension of jeonse deposit loans, mortgage loans, and interim payment group loans.

The financial authorities set an annual loan growth rate target of 5-6% and warned financial companies to comply, leading to a "loan suspension relay" with banks successively halting product offerings. As of the end of last month, the household loan growth rate in the banking sector was about 4.9% for this year. To operate while adhering to the authorities' recommendations during the remaining three months, banks have no choice but to reduce products not aimed at actual demand.

A financial sector official said, "In a situation where the authorities are strictly managing household loans, it is not easy to launch a refinancing loan platform that increases loan accessibility," and added, "Discussions are expected to resume only after the new government takes office in the first half of next year."

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