Financial Authorities and Academia: "Fintech Expansion Thanks to Bank Regulations... Same Regulations Should Apply"

Seminar on 'Regulatory Principles for Digital Finance and Plans for Big Tech Financial Regulation'

[Asia Economy Reporter Sim Nayoung] Voices from financial authorities and academia have emerged calling for 'the same regulation' between fintech·big tech and banks.

Kim Jabong, Senior Research Fellow at the Korea Institute of Finance, stated in a keynote presentation at a seminar held on the 30th at the Bankers' Hall in Jung-gu, Seoul, themed ‘Regulatory Principles for Digital Finance and Plans for Big Tech Financial Regulation,’ “Unlike banks, big tech and fintech do not need to add regulatory costs to prices, which lowers prices, leading the market to prefer the cheaper fintech,” adding, “The spread of fintech is ultimately due to bank regulations.”

Big tech and fintech are performing some roles of banks, but since they are free from the regulations banks face, fair competition between banks and big tech·fintech is difficult. This regulatory difference creates a price gap between banks and big tech·fintech, resulting in banks continuing to face de facto disadvantages.

Researcher Kim said, “If we divide the reasons for fintech’s spread into regulatory arbitrage and technological factors, the regulatory aspect accounts for 60%,” and added, “The key to fintech’s success is actually regulatory arbitrage.”

He also argued that the market between banks and fintech should be strengthened in ‘interoperability’ like the wireless communication market. He emphasized, “Bank information goes to big tech, but big tech information does not come to banks,” and “Interoperability needs to be emphasized more.”

Researcher Kim explained, “Whether you use a Samsung Galaxy phone or an Apple iPhone, whether you use SK Telecom, LG Uplus, or a foreign carrier, you can freely make calls,” and added, “This is possible because information flows symmetrically between parties.”

The financial authorities shared the same opinion. In the discussion following the presentation at the seminar, Kim Yeonjun, Director of the Banking Division at the Financial Services Commission, said, “Tech companies have entered the financial industry and provide various financial services, but the regulatory approach should not differ depending on the type of technology,” and stated, “The regulatory system should be established based on what functions are performed and what risks exist.”

Director Kim also emphasized, “The so-called ‘same function, same regulation’ principle often presented misses ‘risk,’” and said, “There should be ‘same function, same risk, same regulation.’” He added, “Since awareness of the need for regulations related to data monopolies and unfair competition is spreading in major countries, additional review is necessary for us as well.”

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