Financial Services Commission's Willingness to Ease Separation of Banking and Commerce: "Banks Must Collaborate with Fintech"

Woori Financial Research Institute 'Global Financial Companies and Fintech Collaboration Cases and Implications'
Introducing Overseas Success Cases such as JP Morgan and Charles Schwab

[Asia Economy Reporter Sim Nayoung] #Last April, the US online brokerage Robinhood acquired the virtual asset platform Ziglu. Ziglu allows investment and trading from 1 pound in 13 representative virtual assets including Bitcoin and Ethereum, and pays an annual interest of 5% on Bitcoin and pound sterling account balances. Robinhood plans to provide virtual asset trading functions, previously only available in the US, to the UK through the acquisition of Ziglu, which has official authorization in the UK, and expand into various European countries.

As nominee for Financial Services Commission Chairman Kim Joo-hyun showed willingness to ease the separation of banking and commerce for banking innovation, successful cases of global financial companies partnering with fintech are attracting attention. With growing expectations that the long-standing issue of domestic banks’ entry into non-financial businesses will be rapidly established, it is said that learning how to enhance competitiveness through overseas cases is necessary.

According to the report "Global Financial Companies and Fintech Collaboration Cases and Implications" by Woori Financial Management Research Institute on the 25th, the global fintech market size last year was $12.1 trillion, growing at an average annual rate of 30.6% over five years. It is expected to expand to 26.8 trillion won by 2026. In particular, 65% of US banks formed partnerships with one or more fintech companies over three years (2019-2021), and 37% of other banks plan to start new collaborations this year.

JP Morgan improved bond trading efficiency by utilizing the bond data analysis platform of the UK fintech company Mosaic Smart Data. To overcome declining profits in the bond sector, JP Morgan decided to analyze the vast amount of unused bond data and signed a contract in 2017 with Mosaic Smart Data, a fintech company nurtured internally. This fintech company integrated and processed internal and external data, then analyzed it with artificial intelligence to derive market forecasts and support trading decisions. JP Morgan’s bond sector profits achieved high growth rates of 13.5% in 2019 (compared to the previous year) and 44.8% in 2020.

Charles Schwab, a bank and stock brokerage company, acquired the thematic investment management platform Motif in 2020 to provide customers with customized ESG portfolios. Motif improved investor accessibility by allowing portfolio selection based on easy-to-understand detailed criteria such as companies with low carbon emissions and those with excellent governance. Customers can add specific stocks according to their preferences and also check portfolios used by other customers within the platform.

Kim Su-jeong, senior researcher at Woori Financial Management Research Institute, advised, "Domestic banks should form partnerships with fintech companies supporting trading of newly emerging investment products such as virtual currencies, music copyrights, and real estate fractional investments, to prepare in advance for market entry in line with future regulatory changes."