Korea FinTech Observer #2

Welcome to the second edition of the Korea FinTech Observer, covering selected highlights from the three weeks leading up to April 7, 2024. As stated in the launch edition, we do not expect the Korea FinTech Observer to be quite as exhaustive as the Japan FinTech Observer, however, we hope you find it useful still.

Z/Yen Global Financial Centers Index (GFCI), March 2024

Seoul ranked 10th out of 133 cities in the 35th edition of the Global Financial Centers Index report, overtaking Paris, Beijing and Tokyo.

This year’s GFCI report showed that Seoul rose one place to 10th position when compared to the previous report released in September last year. According to the Seoul Metropolitan Government, this is a result of the city government’s steady implementation of policies to revitalize Yeouido, Seoul’s financial district.

Along with the GFCI rankings, Seoul also ranked 10th in terms of FinTech offerings, up one place from September’s report.

Policy

• South Korea has announced plans to allocate approximately USD 700m towards national intellectual property projects in 2024; this investment aims to help the country’s innovation capabilities and enhance its competitiveness in strategic technology sectors; additionally, South Korea will establish a dedicated organization tasked with analyzing domestic and foreign patents related to 12 national strategic technologies
• South Korea has vowed to provide loans worth USD 313.4bn to finance carbon-cutting projects, a joint statement by the government and major banks said; by 2030, five state financial institutions including Korea Development Bank will provide those loans to encourage companies to switch to low carbon production
• In a climate of fervent debate surrounding the proposed ‘Platform Competition Promotion Act’ in South Korea, the Korea Venture Business Association has released survey results indicating significant opposition from the venture community; the Act, announced by the South Korean government in December 2023, seeks to regulate the online platform market by designating key platform companies as “dominant platform operators” and restricting them from engaging in unfair practices within the market

Insurance

• Digital-based insurance comparison and recommendation services will be expanded to areas including pet insurance, savings plans and travel insurance products, as financial authorities aim to further boost the growth of the local insurance market, according to industry officials

Banking

• North Asia regional guide to digital banking: South Korea
• Samsung Financial Networks, a union of Samsung Group’s four financial affiliates, is seeking to launch a super mobile banking app in partnership with a leading South Korean commercial bank; Samsung Card , the representative of the union, which includes Samsung Life Insurance , Samsung Fire & Marine Insurance and Samsung Securities , has offered Korea’s five leading banks — KB Kookmin Bank 국민은행 , Shinhan Finance , Hana Bank , Woori Bank and internet-only K Bank — a proposal to jointly launch a super mobile banking app based on Samsung’s mobile app Monimo
• Shinhan Bank, which earned 549.3 billion won overseas last year and performed the best global performance among domestic banks, has been more active in overseas markets this year; last month, it entered the digital lending market by partnering with an Indonesian fintech company, and this month, it made an equity investment to acquire a $180 million stake in Credilla, India’s №1 student loan company
• South Korea’s JB Financial Group has signed a partnership with OKXE Inc. , a Vietnam-based platform for used motorcycles, eyeing the expansion of its brokerage business in the country
• JB Financial Group has also signed a strategic investment contract with a 30 billion won investment in “Bizplay” and cooperation with major Webcash Inc. Group companies
• Align Partners Capital Management , which conducted an activist campaign against JB Financial Group Co., Ltd. , has succeeded in placing two directors on the board; this marks the first instance of a shareholder-proposed director being included in a South Korean financial company
• Woori Bank to strengthen business ties with CJ OliveNetworks; under this agreement, the two companies plan to jointly develop diversified products and services that will strengthen the convergence of financial and non-financial areas, as well as strengthen marketing initiatives utilizing their own channels and platforms; the two firms will also join hands in exploring data-based business models and in creating greater synergy; they also plan to cooperate to develop a stable systemic platform and operational collaborations
• Finda, a fintech company specializing in loan comparison, has signed a strategic business agreement with an artificial intelligence real estate valuation startup to build a one-stop brokerage system for non-face-to-face commercial real estate mortgage loans

Payments

Source: Worldline’s Global Payments Report 2024

• Korea to take part in global cross-border payments tokenization initiative; central banks and commercial lenders in seven economies and the Bank for International Settlements (BIS) will explore tokenization of cross-border payments through Project Agorá, a public-private partnership
• WireBarley, a fintech company specializing in overseas remittance payments, has introduced a mobile ID card for the first time in the domestic overseas remittance industry; WireBarley customers can use the service more safely and conveniently by using their mobile ID in the real-name authentication process
• GLN International Inc. , a global payment network provider company, has signed an MOU with Fonepay Payment Service, Nepal’s payment network, to explore opportunities to integrate its system to provide cross-border QR payments between Korea and Nepal

Capital Markets

• In February 2024, the Korean government announced its “Value-Up” program, a series of market-friendly measures ahead of legislative elections in April; this follows corporate governance reforms led by the Tokyo Stock Exchange, which saw the Nikkei breach its previous peak after three and a half decades; the surge in Japan’s stock market has revitalized interest in “value” markets in Emerging Markets (EM) as well, with Korea being the most proximate beneficiary; the key debate now is if this time will be different for Korea? Morgan Stanley looks back to trace Korea’s de-rating over two decades to determine whether it is time to engage in the Korea “value trade”
• The online stock trading platform Webull Financial , which is gaining popularity among global individual investors based on its commission-free policy, is entering the domestic securities market in Korea; consequently, there are concerns that individual investors who currently invest in the U.S. stock market through domestic securities firms might switch to Webull

Digital Assets

With CALIVERSE founder DongKyu Kim

We got a preview of the CALIVERSE Inc, an innovative metaverse platform under the Lotte Group, which has garnered recognition for its specialization in delivering an unparalleled sense of realism and immersion across shopping, entertainment, and communal experiences; this achievement is made possible by seamlessly blending cutting-edge graphics with real-time rendering technologies, powered by the remarkable Unreal Engine 5 by Epic Games ; to be launched in August 2024. Check it out here.

• Crypto.com , trusted by more than 80 million customers worldwide and the industry leader in regulatory compliance, security and privacy, announced that it is launching in South Korea, which will allow Korean retail users in the market to trade select cryptocurrencies
• 빗썸코리아(Bithumb Korea)’s IPO plans shelved amid halving of revenues; the exchange, holding assets over 400 billion won (about $300 million), is looking to rebuild public trust after it faced, along with other exchanges, government scrutiny, including a raid on its offices last year
• Daily trading volume on South Korea’s biggest cryptocurrency exchange, UpBit , has tumbled 75% from this year’s high in a sign that frenzied trading in alternative cryptocurrencies (altcoins) has fizzled and digital assets other than market leaders bitcoin and ether may struggle to maintain lofty valuations
• YongKhi Paek , Korea Country Manager at Chainalysis , wrote for Hankyung about hacking trends in North Korea; while North Korea-linked cyber attacks have increased, the amount of stolen crypto has noticeably decreased (Korean)
• Daehong Communications , a South Korean advertising firm, collaborated with Aptos Foundation to create a Web3.0 hub for Lotte, a South Korean multinational conglomerate and Daehong’s parent; it is believed that the partners plan to introduce loyalty programs, NFT-based profile picture projects, and entertainment, among others
• Web3 company CarrieVerse , which issued CVTX, has successfully attracted new investment from Dubai-based cryptocurrency venture capital firm Alpha Token Capital, the latter firm’s first investment in a Korean token; CVTX is used as a governance token for CarrieVerse’s proprietary Web3 gaming platform ‘Cling’, which will soon expand into the global market