[New Financial Hegemony War] 1800 Trillion 'Loan Refinancing' Adrift... Financial Innovation Blocked by Power Struggle

Financial Services Commission Indefinitely Reviewing Korea Loan Platform
Challenges Ahead for Electronic Financial Transactions Act and MyData Business

[Asia Economy Reporters Kiho Sung and Jinho Kim] The year-end launch of the "Debt Refinancing (Loan Switching) Platform," originally planned for October, has effectively been derailed. The power struggle between the existing financial sector and big tech companies, whose interests conflict, has pushed the debt refinancing platform?key to managing household loans exceeding 1,800 trillion won?back to square one.

The financial authorities, criticized for overly favoring big tech's entry into finance under the banner of financial innovation, now face criticism again for recklessly structuring the platform centered on big tech, ultimately causing a breakdown. The battle for control over the Electronic Financial Transactions Act and MyData (Personal Credit Information Management) business, which will reshape the financial industry structure and ecosystem, is also expected to become more complex.

According to the financial sector on the 6th, newly appointed Financial Services Commission Chairman Seungbeom Ko will hold his first meeting with the heads of the five major financial holding companies on the 10th. The agenda is expected to include the increasingly contentious debt refinancing platform. Previously, the financial holding company heads had requested former FSC Chairman Seungsoo Eun to limit the debt refinancing platform to mid-interest loans.

The financial sector is on high alert as Chairman Ko has moved beyond a "comprehensive review" of the debt refinancing platform to announce plans for an "indefinite review." After attending an international conference at the World Economy Research Institute on the 2nd, Ko told reporters, "I will not be bound by a deadline for reviewing the debt refinancing platform." He added, "We will take the time needed to thoroughly discuss the various issues."

Initially, the FSC planned to launch infrastructure this October that would allow financial consumers to switch to lower-interest loan products through a non-face-to-face, one-stop process. Fintech applications would provide information on the interest rates of all loan products from other financial companies available for refinancing, based on the consumer's existing loan information, enabling consumers to apply for the most advantageous products.

Aside from improving consumer loan convenience and accessibility, conflicts arose between the financial sector and big tech/fintech over various issues. Disagreements were sharp regarding cutthroat competition due to large differences in loan interest rates among companies, commission fees, and non-face-to-face service channels. As the gap failed to narrow, the financial authorities' original plan to consolidate all financial companies' loan information in one place also fell through.

A financial sector insider said, "The original purpose of the debt refinancing platform was to increase consumer accessibility and make loan switching easier. But under the current circumstances, it is highly likely to become a 'half-hearted switching' system."