[Top Bankers] South Korea Bankers Club Chief Calls for Tighter Regulation on Big Tech
President of the Federation of Korean Banks, Kim Gwang-soo (KFB)
This is one part of a series of interviews and analysis of top South Korean bankers, policymakers, and investors who lead the financial industry here. This is the first delivery. — Ed.
Banks are facing intensifying competition from IT companies as consumers gravitate towards digital financial services tailored to their needs.
However, the president of the Federation of Korean Banks, Kim Gwang-soo, believes that lenders have distinctive competition that could overcome the challenges posed by fintech rivals.
“While the big technology and fintech companies play a role of intermediaries in the provision of financial instruments, the banks are experienced in a wide range of services and offer a high level of security,” Kim said during a press conference that he marked his 100th day in office on Tuesday.
The bureaucrat-turned-banker was chosen late last year to head the nearly century-old organization KFB, which represents financial institutions doing banking and related business in Korea. Kim’s new leadership role in South Korea’s top bankers’ club came at a critical time when the market is rapidly moving from physical to digital. In the course of the rapid transformation, Kim has rarely raised concerns about banks facing tighter restrictions than emerging fintech platforms, saying such an environment is not fair to existing players.
“Concerns have been raised that the market dominance of Big Tech could hamper stability in the financial industry and recently introduced digital financial policies could cause reverse discrimination against existing financial institutions,” he said.
His comment came as major internet platform players such as Kakao and Naver threaten to overshadow banks with one-click digital payment systems and data-driven services based on their vast customer bases. .
At the center of the intensifying digital war between incumbents and newcomers is MyData, a government-led project that grants business licenses to financial institutions and technology companies to expand access to customer information across in order to promote personal credit information management services.
The banks’ MyData service will be more reliable than those offered by tech-heavy rivals, as the former are already under strict internal control and a strong security infrastructure, Kim said.
“I think that banks will be able to provide a personalized one-to-one product to the customer because it is a product provider that directly designs and sells financial products,” he added.
What the government needs to do is separate big tech from fintech and come up with a new set of regulations to strengthen monitoring of big tech’s credit risks, according to Kim.
“Tighter regulation is needed for big tech platforms that have a big (market) impact,” he said.
Recently enacted legislation on financial consumer protection, set to take effect on March 25, is expected to place a greater burden on banks and hamper their efforts to digitize their operations. For fair play, the new law should apply to fintech and big tech companies, not just banks, he added.
“In the midst of the protracted COVID-19 pandemic, contactless services are progressing faster than expected. Banks need more efforts to transform into platform companies to develop long-term competitiveness,” she said.
Kim is one of Korea’s top financiers who rose to the top tier of the industry after decades of government service.
Before entering the private sector, he worked for the Ministry of Finance and the Financial Services Commission for 30 years.
Before joining KFB, Kim served as Chairman of NongHyup Financial Group for more than two years from April 2018.
During his tenure, NongHyup Financial Group posted a record net profit of over 1 trillion won (US$874.4 million) for two consecutive years.
His strategic decisions on building the foundation for digital transformation and expanding global business were said to have helped the financial giant with a large client base in the agricultural sector secure future growth. Now, as head of the KFB, Kim is also facing market pressure to adopt the ESG principle.
For starters, the organization added two new departments on sustainable management and legal affairs last month, but there has yet to be a big push for change, particularly in governance.
By Park Han-na ([email protected])