Financial Services Commission Opens Financial Industry Platformization... Banks Say "Welcome for Now"

On the afternoon of the 23rd, Kim Joo-hyun, Chairman of the Financial Services Commission, reviewed measures to revitalize platform financial services and enhance the regulatory sandbox with Park Byung-won, Chairman of the Financial Regulatory Innovation Meeting, and 16 private committee members at the 2nd Financial Regulatory Innovation Meeting held at the Government Seoul Office in Jongno-gu, Seoul.

[Asia Economy Reporter Eunju Lee] As the government paves the way for the platformization of the financial industry, major banks are showing a strong positive response. They particularly focus on the fact that through building a 'Digital Universal Bank,' they can reduce the costs of platform investments that were previously duplicated. However, there are cautious concerns that this deregulation could become a key factor in weakening the competitiveness of small and medium-sized banks with limited financial resources. The difference in financial power may translate into differences in platform competitiveness, potentially leading to customer attrition.

On the 23rd, the Financial Services Commission held a Financial Regulation Innovation Meeting and announced plans for the platformization of the financial industry. The core of the plan is to ease regulations so that financial companies can become platform companies. Until now, due to strict ancillary business regulations, banks found it difficult to provide various platform services beyond their core businesses such as loans and deposits. The FSC decided to allow integrated app operations as ancillary business, enabling services from affiliates such as insurance, cards, and securities to be offered within a single integrated app. Big tech companies are also now able to mediate financial products that were previously restricted by regulations. Except for demand deposits, they can provide recommendation services for financial products such as savings deposits and insurance.

Major banks are welcoming these changes. They particularly note that connecting affiliate services like insurance, cards, and securities within a single bank app will reduce the duplicated app investment costs that were previously incurred by each affiliate. A representative from a major bank said, “Although building a super app will initially require significant investment, we believe it will save costs in the long run,” adding, “Since we can reduce the duplicated costs incurred by each affiliate, large banks with multiple affiliates welcome this.” Another banking industry official said, “Banks have inevitably had weaker platform competitiveness compared to platforms like Toss, which provide securities and banking services at once,” and added, “We see this as an opportunity to enhance competitiveness by organizing the overly numerous and complicated bank apps.”

Regarding the 'deregulation' benefits gained by big tech companies such as Naver, Kakao, and Toss, the atmosphere is still that “there is no major concern.” According to the FSC, once designated as an innovative service, fintech companies or banks can sell regular savings deposits, insurance products, and others from other financial companies. A banking industry official said, “If the savings deposit products allowed by the FSC this time are sold, the banking sector’s commission income could also increase,” and added, “Of course, we cannot guarantee the very distant future, but for now, it is not a change that causes significant concern.” Rather, it is seen as an opportunity to increase commission income from product sales.

However, there are cautious forecasts that such regulatory changes could become a turning point leading to loss of competitiveness for small and medium-sized banks with weak financial power. The scale of investment in their own platforms already varies depending on the bank’s financial strength, and small and medium-sized banks may find it difficult to respond quickly to these changes. Banking industry insiders said, “Among regional banks, small and financially weak medium-sized companies may find this worrisome,” and added, “Even if they decide to invest 1% of their performance equally, there will inevitably be a difference of several hundred billion won. Since economies of scale do not work, the competitiveness gap could widen significantly.”

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