Chinese Capital Influx
As Korea’s first internet bank will appear in a month, Alipay has also jumped into the domestic online-only bank business. Therefore, the competition among business operators who have applied for preliminary approval seems to be stronger.
Financial industry sources are paying attention to positive aspects of Alipay’s decision first. They say that the influx of Chinese capital will grow the pie of the domestic financial industry and expand new innovative services. Instead of competing in the saturated domestic bank industry, it can be a bridgehead to tap into the Chinese market. Also, it can consider new financial services for Chinese tourists to Korea, whose number exceeds 10 million on an annual basis.
An official from the Financial Supervisory Service said, “Since existing domestic banks are already invested by capital from diverse countries, including China, as shareholders, it won’t have negative effects on the preliminary approval. Rather, we see it as a good thing in the way that domestic internet-only banks can expand to global markets.”
On the other hand, some express concerns, as the major industries, which have led the Korean economy including manufacturing and IT services, are recently being eaten by Chinese capital one by one. An official from the financial industry said, “With Chinese fintech companies rapidly dominating the global market, the domestic market is a new market for them to be developed. This is why we shouldn’t be elated at the large-scale capital influx and platform but always have wariness at the appropriate level.”
Financial authorities are currently carrying out the evaluation by a consortium consisted of seven experts in the finance, IT security, fintech, legal, accounting, risk management and consumer sectors, and will announce the final decision for preliminary approvals at the end of next month.