[The Editors' Verdict] The Future of Financial Platforms

Over the past 4 to 5 years, no industry seems to have undergone as rapid and structural changes as the financial industry. Since the introduction of fintech (finance + technology) utilizing IT and digital technologies, there have been breathless changes including open banking, the establishment of data exchanges, and MyData (personal credit information management). Recently, KakaoBank's market capitalization has exceeded 40 trillion won after its listing, causing tension among traditional banks. This was unimaginable in the past.

Why are these changes happening? In short, the nature of finance is completely changing due to the 4th Industrial Revolution and the resulting digitalization. First, I want to point out that finance, which was an intangible service, is now becoming tangible. By using mobile screens, it has become easy to explain how fast, convenient, cheap, and safe a financial service is, so the previously intangible financial services that could not be seen or touched are now effectively becoming tangible. This has enabled rapid innovation and has allowed overcoming language and cultural barriers in overseas expansion.

Second, financial products have shorter product cycles in terms of production, sales, and consumption than any other industry’s products, leading to frequent consumer evaluations and increasing innovation pressure. Originally, financial products are intangible and do not require delivery time unlike general manufactured goods. Also, since Korea entered the data economy era last year, customized financial products can be produced faster than any other industry’s products by utilizing consumer data.

Third, the characteristics of financial transaction data are also one of the factors driving changes in the financial market. This is because financial payment data is not only financial data but also contains information that can analyze consumer behavior for all products in all industries. Therefore, by analyzing big data through artificial intelligence, synergy effects can be obtained by converging finance with all other non-financial industries, such as marketing points in other industries and revenue models. Of course, the rapid changes in finance cannot be separated from the strong and consistent digital policies of financial authorities. Over the past 5 to 6 years, fintech activation policies, innovative financial services through regulatory sandboxes, and open banking have maximized the effects of digitalization in finance.

Now, attention is focused on how finance will change and evolve in the future. Currently, the industry unanimously points to the MyData business as the momentum for change. The MyData business is attracting great interest with participation from as many as 53 institutions. Moreover, experts evaluate that through the MyData business, which involves convergence with technologies such as consumer big data, artificial intelligence, blockchain, and cloud, we have entered the era of financial platforms.

The core of the financial platform era is convergence with big data. By operating core technologies on consumer big data, various converged services can be supplied in a timely and customized manner. This means that not only the convergence of banking, insurance, and securities products but also any field with strong consumer demand can be integrated with finance. Fields with strong consumer loyalty are those that consumers find highly interesting or essential in daily life. From this perspective, gaming, medical health, telecommunications, real estate, and education can be considered priority targets. Shinhan Bank has partnered with the gaming company Nexon, and KB Kookmin Bank has partnered with the telecommunications company KT, but it is expected that medical health, real estate, and educational services will also be able to provide converged services on financial platforms in the future. Partnerships with related data and technology companies and their entry into the financial industry are also anticipated.

Jung Yoo-shin, Dean of the Graduate School of Technology Management, Sogang University