Even On-Demand Companies Offering Web Services... Tinkering with 'App' Cards (Comprehensive)

Officially Registered Companies' App Development and Advancement Plans
Must Establish App-Based Systems as Institutional Finance Is Included
Increase Customer Touchpoints and Expand Subscription Channels Effectively

On the 11th, officials are taking a commemorative photo at the launch ceremony of the Online Investment-Linked Finance Association held at Fintech Lab in Yeouido, Seoul. From the left: Yongtae Kim, Director of the Financial Supervisory Service; Byung-hoon Lim, Auditor of the Online Investment-Linked Finance Association; Chaeyul Lim, Chairman of the Online Investment-Linked Finance Association; Hyojin Lee, CEO of 8Percent; Daeyoon Kim, CEO of PeopleFund Company; Seongjun Kim, CEO of Lendit. Photo by Online Investment-Linked Finance Association

[Asia Economy Reporter Song Seung-seop] Companies that have successfully registered as online investment-linked finance businesses are developing and revamping applications (apps) that provide their services. As they are incorporated into the formal financial system and must compete with other industries, this is seen as a strategic move to attract more users.

According to the industry on the 24th, three officially registered online investment companies?8 Percent, Lendit, and PeopleFund?plan to develop or enhance their apps. ‘8 Percent’ plans to launch an official app within this year. A beta version has already been created, and internal employees are currently using the app to make corrections and improvements. Once revisions are complete, the official version will be updated and released in the second half of this year. In the case of ‘Lendit,’ although a concrete development blueprint has not yet been established, they explained that due to significant demand through mobile, the app will be released after some time.

Among online investment companies, ‘PeopleFund’ is the only one providing services through an app and recently began app enhancement work. Since its launch in June 2019, the app has only offered investment functions, but they plan to add a loan section and newly release it in the third quarter. The goal is to improve user experience (UX) by enabling face-to-face loan contracts and document submission functions so that users can access services regardless of time and place.

Most P2P companies, including officially registered online investment companies, have implemented services online and on mobile through web pages. Because their customer base was smaller compared to regulated financial institutions, they could attract users without an app. Unlike commercial banks aiming to be lifestyle platforms with many functions or funds that consider risk profiles in investment methods, their services are simpler.

Online Investment Companies Enhance Mobile Competitiveness to Capture Mid-Interest Rate Customers

One reason for low consumer complaints was the interface designed for easy use even on mobile web pages. An industry insider explained, “Our internal developers put great effort into making the mobile interface convenient and natural to use,” adding, “Existing customers have been using it by bookmarking the mobile web page on their phone home screens.”

The plan to develop and enhance apps is driven by competitiveness. Currently, online investment companies must compete fiercely with internet-only banks and savings banks in the mid-interest rate loan market. Internet-only banks have committed to handling more than 30% of all credit loans for mid- to low-credit borrowers by 2023. Toss Bank has declared it will increase this to 44% by attracting many customers previously excluded from first-tier financial institutions. Starting this year, they plan to increase credit loans for mid- to low-credit borrowers to 4.6 trillion won, up about 2.6 trillion won from the end of last year. Their target customers are the same as those of online investment companies: mid- to low-credit borrowers, thin-file customers (people with insufficient financial history), and small business owners.

To compete with much larger financial institutions in lending, they recognize the need to keep up with the underlying infrastructure. Existing financial institutions are already attracting customers by promoting convenient and simple loans through apps. Savings banks are also continuously enhancing their apps through their central associations as a means of customer acquisition and management.

There is also an aspect of increasing customer touchpoints and expanding subscription channels. Most online investment users already access services via mobile, and in the case of PeopleFund, the monthly active user (MAU) ratio on the app is about 1.5 times higher than on the web. An official from an online investment company said, “We expect to absorb the rapidly increasing demand from financial consumers after official registration through the revamped app,” adding, “Especially, the app usage frequency is expected to be high among customers in their 20s, who have high mobile usage.”