[New Financial Hegemony War] Banks and Big Tech Debt Refinancing Platforms Reach Out to Both Sides of the Secondary Financial Sector

Wider Customer Touchpoints Bring Greater Benefits
Often Part of Financial Holding Companies
Participation Not Easy for Big Tech Platforms Alone

[Asia Economy Reporter Kiho Sung] As debt refinancing (loan switching) platforms are being developed separately under the leadership of banks and big tech (large information and communication companies), the secondary financial sector is settling on a two-track approach to participate in both platforms.

The reason is that participating in both platforms offers significant advantages, such as increasing customer touchpoints. Additionally, there are concerns that the secondary financial sector, which is sensitive to fee burdens, might somewhat alleviate these fees, making the separate launches more likely to materialize.

According to the financial sector on the 6th, the banking sector will soon hold consultations with the secondary financial sector to discuss participation in a joint debt refinancing platform. A representative from a commercial bank explained, "We plan to begin consultations with each financial sector soon for the platform launch scheduled for December," adding, "The secondary financial sector has expressed a positive stance on participation from the beginning."

The debt refinancing platform, which the financial authorities are promoting as a key project, aims to enable borrowers to switch to lower-interest products through a non-face-to-face, one-stop process. Therefore, the success of the project hinges on how many financial institutions participate in the debt refinancing platform.

The secondary financial sector is taking a wait-and-see approach. They are not entirely welcoming of the debt refinancing platform either. For some products, there are no early repayment fees, and since they are mainly used short-term, if interest rates and other factors can be compared at a glance, there is a concern that customers might be poached.

Like the banking sector, fees payable to big tech and fintech companies are also a burden. In fact, the secondary financial sector, including card companies and savings banks, is smaller in scale compared to banks, so the fee burden is heavier. Regarding this, the joint bank platform is considering a plan to share operating costs in the form of membership fees. Another bank official explained, "Since the platform is being created jointly, we are not considering separate fees," adding, "However, we are discussing a plan to share platform operating costs jointly."

A secondary financial sector official said, "The new Financial Services Commission chairman has stated that the debt refinancing platform will be re-examined without being bound by deadlines, and as far as I know, there have been no additional discussions yet," expressing, "Since the debt refinancing platform discussions have returned to square one, we have no choice but to watch the situation going forward."

For top-tier card companies, savings banks, and capital companies, many are affiliated with financial holding companies, making it difficult to participate only in the big tech-led platform. Mutual finance institutions such as credit unions and Saemaeul Geumgo have a stronger negative sentiment. They have no plans to participate in the debt refinancing platform by the end of the year and intend to decide after reviewing the situation next year.

Another secondary financial sector official pointed out, "The financial sector is concerned about the possibility of becoming subordinate to the growing fintech companies," adding, "If the debt refinancing platform had been discussed centered on the financial sector from the start, there would have been no friction."