[The Editors' Verdict] Regulatory Improvements That Enabled New Industries

Easing Geumsan Separation Regulations Opens New Markets
Battery Subscription Allowed and Wireless Charging for Electric Vehicles Also Benefits from Regulatory Improvements

Financial authorities have been pushing for the relaxation of the separation between banking and commerce regulations since last year and plan to finalize this in the first half of this year. If this happens, financial companies with massive capital, data, and infrastructure will be able to leverage these strengths to enter various industries. Businesses like KB Kookmin Bank’s ‘Liiv M’ (MVNO) or Shinhan Bank’s ‘Ttaenggyeoyo’ (delivery app) will be allowed to operate continuously. Financial holding companies are preparing to enter diverse sectors such as e-commerce, blockchain, digital assets, healthcare, mobility, and artificial intelligence (AI).

The Financial Services Commission’s concerns originated from the reality that the boundaries between financial and non-financial sectors are blurring as new technologies like big data and AI merge with the financial industry. In the midst of digitalization and big blur (the phenomenon where industry boundaries become ambiguous), new players such as fintech (finance + technology) and big tech (large information technology companies) are already introducing innovative financial services. Regulators likely believed that by improving the system and loosening the financial industry’s constraints, competitive new businesses would emerge, enhancing public benefits as well.

The approval of the electric vehicle battery rental business is also an example of regulatory improvement that created new business opportunities. The current Motor Vehicle Management Act does not separately register ownership of electric vehicles and their batteries. This is for the same reason that ownership of the chassis and core components like the engine of internal combustion engine vehicles is not registered separately.

In electric vehicles, the battery price accounts for about 40% of the vehicle’s price and is a highly valuable core resource. Since the lifespan of the chassis and the battery do not coincide, discarding the battery along with the chassis would be a tremendous waste and inefficiency.

Credit finance companies such as capital firms have long eyed electric vehicle battery subscription services as a new business, but it was impossible under current law. The Ministry of Land, Infrastructure and Transport plans to revise the vehicle registration regulations in the first half of the year to allow the registration of battery rental information in the registration ledger. This will enable the credit finance industry to develop and sell related products, creating a new market. By utilizing battery leasing to reduce vehicle prices, the adoption of electric vehicles will also increase rapidly.

When Henry Ford founded Ford Motor Company in 1903 and developed the world’s first modern automobile, people mocked him, believing that expensive cars would never succeed. Oil magnate Rockefeller saw it as an opportunity. He built gas stations across the United States, preparing for the era of mass automobile production and creating a new industry.

The competition over the ‘future gas station’ business 120 years later is similar. To dominate the electric vehicle wireless charging market, BMW developed a PHEV (plug-in hybrid electric vehicle) wireless charging system as early as 2018. Toyota and Porsche are expected to complete the development of 3 kW and 10 kW wireless charging systems, respectively, this year. A representative from a domestic automaker involved in this system development said, “Most competitors have secured the technology, but have not yet reached the mass production stage.”

To compete fiercely in securing technology, related domestic companies requested the allocation of the frequency (85 kHz) for electric vehicle wireless charging. The government promptly revised the Radio Waves Act enforcement decree and related notifications at the end of last year, paving the way. There are many good examples. Proper regulatory improvements can create new industries and secure future growth engines.