South Korea is slow in adopting fintech, while China has already entered the late stage of popularization, a report from the Korea Development Bank (KDB) shows.
The report on the Korean and global fintech industry says the global fintech adoption rate stands at 33 percent, entering the early stage of popularization. South Korea’s adoption rate falls short of the global average with 32 percent.
On the other hand, China, which lags in existing financial services, has entered the late stage of popularization with the average fintech adoption rate of 69 percent, says the report, which was written by Kang Maeng-soo, a researcher at the KDB’s Industrial Research Center,.
On the list of the 2018 top 100 global fintech companies recently released by global consulting firm KPMG International, the top three companies are all Chinese, with five out of the top 10 fintech companies coming from China.
In particular, countries that have an active fintech industry tend to be advanced in terms of banking liberalization. The United States, the United Kingdom and Australia, which have a large economy and more than 80 points in terms of the level of banking liberalization, account for 43 percent of the top 100 fintech firms.
In contrast, East Asian countries, which have strict financial regulations executed by the government, tend to have an inactive fintech industry.
Kang said, “South Korea, Japan and Taiwan, which have less than 80 points of banking liberalization, all have only one fintech firm that made the top 100 list. However, China has an active fintech industry as the government regulations on fintech companies are weak, though it has a low level of banking liberalization.”
Accordingly, market experts point out that the government should create a flexible financial regulatory environment to help domestic fintech companies establish a system that can steadily and stably make profits.
According to a survey conducted by global consulting firm EY, the percentage of fintech users who use financial services via smartphones was 20 percent points higher than non-fintech users. Particularly, more than half of fintech users said they would use the most convenient financial services regardless of prices.
Kang said, “Financial regulations are needed to maintain the stability of financial systems but there are limits for individual startups to respond to complicated regulations. A one-stop center is necessary to introduce a regulatory sandbox and promote the development of fintech business models that are compliant with financial regulations.”