[1mm Financial Talk] Revisiting the Launch of Debt Refinancing Platform... Fintech with No Expectations?

[Asia Economy Reporter Eunju Lee] Although discussions about relaunching the debt refinancing service are underway, voices of "no expectations" are emerging among fintech companies. While the political sphere is emphasizing the need to ease borrowers' burdens during the high-interest period and is stoking efforts to establish a platform, it is expected to be difficult to overcome opposition from traditional banks this time as well.

According to the industry on the 6th, discussions on building a debt refinancing infrastructure have recently reignited, centered around the political sphere. Both ruling and opposition parties have expressed the view that a debt refinancing platform is necessary as borrowers' interest burdens increase during the high-interest period. The debt refinancing platform is a service that allows users to compare and switch loan products from financial institutions through a mobile application (app). Recently, financial authorities have also been conducting discussions related to building a non-face-to-face debt refinancing infrastructure with fintech companies, indicating that talks for relaunching are underway.

Currently, most fintech companies introduce debt refinancing products on their platforms. However, due to limited participation from banks, there is a lack of comparison options, and since a debt refinancing transfer system is not established, borrowers cannot switch loans non-face-to-face within the platform. For borrowers, there is insufficient loan product information and non-face-to-face application is difficult, so it is more efficient to visit banks in person. For this reason, the political sphere sees the need for a platform that supplies "sufficient debt refinancing product information" and enables non-face-to-face "switching."

However, the fintech industry's expectations are not high. They say, "Because opposition from banks is so strong, the feasibility is low, so expectations are not high." If a debt refinancing platform that allows easy loan comparison and immediate switching outside of banks is established as requested by the political sphere, it is believed that authorities will find it difficult to overcome opposition due to potential damage to banks' profitability.

An industry insider said, "Recently, traditional commercial banks did not feel a great sense of crisis over the Financial Services Commission's easing of big tech regulations, possibly because core revenue sources like loan products were not included." He added, "However, if core bank products like loans can be compared and refinanced on other platforms, banks' profitability could be damaged. Naturally, they will strongly oppose it. I do not think authorities will overcome these concerns." Another insider said, "The recent government decision to allow big tech to 'recommend' insurance products was also made with great difficulty," adding, "It seems the current administration is strongly conscious of the public opinion and sensitivities of existing stakeholders such as insurance planners."

The atmosphere among small and medium-sized fintech companies is mixed. Since detailed criteria such as which companies will be selected as operators have not yet been disclosed, even if all companies are given opportunities, there are concerns that borrowers will gravitate toward large big tech companies. Small and medium fintech firms have relatively less capacity to connect with financial institutions. Especially recently, internal concerns due to talent outflow are significant, causing considerable worry. An employee of a small fintech company said, "Recently, many employees have been leaving the company," adding, "There is a pervasive sentiment that there is no future if you stay, which causes a sense of inferiority, and the fintech industry overall is contemplating survival possibilities." He explained, "In this situation, it is difficult to judge that the establishment of a new debt refinancing platform will have only positive effects on small companies."

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