[Opinion] Powering Up Fintech (Power Up)

[Asia Economy Reporter Baek Jong-min] Advances in technologies such as biometric recognition, cloud computing, distributed ledger technology, machine learning, and robotics are accelerating financial innovation by combining with finance, significantly impacting not only overall financial services but also financial business models. In extreme cases, the role of existing financial companies may be greatly reduced, and core functions might be carried out by new forms of non-financial companies. There is a very high possibility of relying on non-financial companies specialized in data accumulation, analysis, and utilization. Online, real-time contact points with customers are established, and various information is integrated to promote financial demand and service innovation, quickly forming new types of customer relationships. Such changes are more advantageous for platforms with multi-sided markets and network effects. This is precisely why both financial companies and fintech firms aim for platformization.

Recently, fintech (finance + technology) companies have also been trying to advance platformization through collaboration or cooperation with financial companies. However, as the digital transformation of financial companies accelerates, it is difficult to be optimistic that a long-term relationship between the two will continue due to the possibility of copy-cat replication.

One of the expected effects of fintech so far has been to increase accessibility and inclusiveness for financial consumers who could not utilize existing financial services. There were high expectations that it would contribute to solving socio-economic challenges such as population decline and lack of management support resources for small business operators. Additionally, strengthening relationships and communication with customers through advanced information analysis capabilities, utilization, and interfaces was also anticipated. It was expected that using advanced analytical techniques could produce new high value-added information and increase transparency regarding the pricing of financial products and services. The positive expected effects on society and finance led to active fundraising and investment attraction for fintech companies.

Ultimately, the expectation for fintech is that customers can enjoy the products and services they seek more conveniently and at appropriate costs. It is expected to support customers' decision-making simply and easily, provide seamless and consistent omnichannel experiences, communicate with customers, and responsibly resolve issues promptly. For this, the participation of customers (financial consumers) in the process is essential.

For fintech companies to be competitive, they must clearly identify what financial consumers demand and utilize the optimal technology (Tech) to address these needs. The infrastructure to understand financial consumers' demands has already been provided institutionally through MyData, Open Banking, and MyPayment. Focusing on monetizing the inefficiencies of existing finance, such as selling customer databases externally and tiring customers with unwanted unsolicited solicitations or advertising floods, is far from the essence of fintech.

With an environment of limited growth potential due to low interest rates, low growth, and aging populations expected, fintech faces deep concerns about how to grow. Existing financial companies may transform through digitalization, overseas expansion, and scaling up, but fintech companies cannot do so due to limitations in capital scale and human resources. Since the ultimate goal of fintech companies is to resolve inefficiencies in the existing financial industry and increase accessibility and inclusiveness of financial services to enhance financial consumers' utility, they need to focus more actively and rapidly on financial consumer experience, support, and care. We look forward to the true power-up of fintech companies.

Ahn Soo-hyun, Professor, Graduate School of Law, Hankuk University of Foreign Studies