Shabby Korean Fintech
According to a report on the trend of the global financial technology (fintech) and its implications for Korea recently published by the KT Economics & Management Research Center, the local fintech industry is still in its early stage. On the other hand, the fintech sector in advanced countries is growing rapidly.
The number of fintech start-ups is rapidly increasing in other countries, along with large-scale investments.
Data compiled by market research firm Venture Scanner shows that 1,027 fintech companies around the world are engaged in 17 areas as of Nov. 2014. A total of US$12.9 billion was invested to these firms.
By country, the U.S. already went through the early stages of the fintech revolution, and fintech has approached the level of being able to change people's lifestyles. The U.K. stands out among developed countries in the fintech industry. Since the global financial crisis of 2008, fintech companies have started their business in London, and a massive amount of money has been injected into those firms. As a result, there are 1,800 companies in the city as of 2014.
Even China continues to expand the fintech industry based on its massive market, a large number of mobile phone Internet users, and the Chinese government's support for the sector.
In contrast, Korea doesn't compare. The report said, “Most of all, the market environment is not good to start a business in the fintech industry. In particular, it will be difficult to improve the start-up culture in the short term.” In general, a significant amount of investment and manpower is needed to start a business in the fintech area, but there are no venture capital firms specializing in this sector. Moreover, talented people tend to avoid establishing a company these days.
In addition, the organizational structure of local financial institutions is cited as one of the many problems. Fintech start-ups need a close partnership with credit card companies and banks. In fact, mainly large banks in other countries invest in the introduction of new technologies or promising fintech start-ups. However, Korea is unable to catch up with this trend.
Finally, the removal of regulations and a deep distrust of support for the promotion of the fintech industry by the government are also named as barriers to growing the sector.