[Start! MyData] From Approval Review to Controversy... Possibility of 'Premium M&A'

Financial Services Commission Announces First MyData Full Licensees on 27th
SK Planet Faces Controversy Following Naver Financial
Challenges Include 'Premium M&A' by Small Fintech Firms and Security Vulnerabilities

[Asia Economy Reporters Kiho Sung and Wondara] When the personal credit information management business (MyData), known as the "financial secretary in my hand," officially launches next month, financial consumers will be able to organize and summarize their own financial information directly. As they receive optimized customized products and services, Private Banking (PB) services and Wealth Management (WM) services, which have so far been exclusive to high-net-worth individuals, will also become available. From the perspective of financial companies, securing market dominance is crucial as this represents a new source of revenue, but controversies have persisted ahead of the final license selection on the 27th. There are many legal and institutional shortcomings, and continuous improvements will be necessary going forward.

◇ Controversies over screening of Naver, KakaoPay, etc. = Since the beginning, there have been fairness controversies regarding the screening system for MyData licensing. According to the Credit Information Act, if a major shareholder owning more than 10% of a company's shares is involved in ongoing litigation or has been sanctioned by financial authorities, the company is disqualified.

A representative case is Naver Financial. Although Naver Financial received preliminary approval in the first round, it faced setbacks when it was revealed that its major shareholder, Mirae Asset Daewoo, was under prosecution investigation. Consequently, Naver Financial barely met the requirements by reducing Mirae Asset Daewoo's shareholding from 17.66% to 9.5%. However, since the two companies have a strategic partnership, critics argue that the reduction in voting rights is ineffective considering the actual influence. KakaoPay was unable to receive preliminary approval because the sanction history of its second-largest shareholder (43.9% stake), Ant Financial, in China has not yet been confirmed.

On this day, SK Planet, which has also faced accusations of loopholes following Naver Financial, is expected to be included in the list of final licensees. SK Planet applied for preliminary approval stating it would not engage in "investment advisory and discretionary investment (financial business)" through robo-advisors, a major revenue area of the MyData business. This is because under the Fair Trade Act, SK cannot have a financial company engaged in finance or insurance as a subsidiary. However, industry insiders speculate that SK Planet will first enter the MyData business and then use collaboration strategies with affiliates to engage in financial business. This effectively nullifies the principle of separation between finance and industry.

Some also raise the possibility of "premium mergers and acquisitions (M&A)" by fintech companies that have received final licenses. Since the system has shifted to licensing, obtaining the final MyData business license itself is expected to become a "premium." There are also concerns about the security of fintech companies attempting financial business for the first time.

◇ Need to improve screening and supplement guidelines = Aware of these controversies, financial authorities are preparing improvements to the screening system, including security guidelines such as communication methods. The Financial Services Commission is finalizing the "MyData Guidelines" next month, which will cover the subscription and consent methods for MyData services, the scope of information provided through MyData, secure data transmission methods, and consumer protection measures.

Do Kyusang, Vice Chairman of the Financial Services Commission, recently stated at a "Meeting to Enhance Innovation and Dynamism in the Financial Industry," "We will prepare improvement plans to enhance predictability and rationality regarding the screening suspension system operated during new licensing and major shareholder change approvals."

However, the industry worries that since companies without financial experience or with limited capital will enter, the guidelines will inevitably be set at a low security level considering the reality.

Professor Ji-yong Seo of Sangmyung University pointed out, "Because the MyData business allows entry with small capital, there is a risk of monopolization through M&A by financial companies acquiring platforms, so the government needs to provide guidelines on capital requirements." He added, "The future focus should also be on how well data is managed," and noted, "In the case of Naver Financial, there is a tendency to prioritize its own advertising products, so guidelines on monopolization should also be established."