Korea Fintech Industry & Fintech Center Korea

YooShin Jung

Contents

I. Current State of Fintech in Korea

II. 4th Industrial Revolution & Financial Innovation

III. Fusion with New Technology

IV. Special Act for Fintech in Korea

V. Introduction of Fintech Center Korea

I. Current State of Fintech in Korea

I. Current State of Fintech in Korea

Global Fintech Industry & Korean Fintech Industry

Fostering Fintech Industry → ‘Financial Reform’ through Competition and Innovation

[7/30, 2015 ]

Alibaba Samsung GM

Electronics

201.6 billion USD

155.5 billion USD50.6 billion

USD

$111.8 billion

2018

$ 9.3 billion

2008

Security improvement for

increased non-face-to-face

transactions

Fintech’s Potential to Change the Financial Services Landscape

New trends of financial industry

Internet Bank Usage

Mobile Bank Usage

94 % 50 %

I. Current State of Fintech in Korea

Four Steps to Fintech Activation

About 2 months

20 days

Before After

No.1 Simple Payment Service in Korea

‘Samsung Pay’

464

734

0

100

200

300

400

500

600

700

800

User

Samsung Pay User Increased (Ten Thousand)

2017 2018

Simple Payment Service Worldwide

Daily Average

Used Money

The Number of Uses

3.1 Times

2.8 Times

90.8 Million

29 Million USD

1 Million

Cases

2.81 Million

Cases

• Domestic : A significant growth 2016. 11.8 billion → 2017. 40 billion .Yet 2% of card transaction amount

• Overseas : China is the most powerful country in simple payment. 2017 CNY 10,007 Quadrillion

(80 times more than USA), Alipay member 430 million people (Paypal 160 million people)

I. Current State of Fintech in Korea

Banking(Simple Payment, Remittance)

2016 2017

Domestic Accumulated P2P Amount of Loans’

Increasing Progress

7.52% increased over month,

23 times increased during 22 months[Korea P2P Finance Association]

(Source : Korea P2P Finance Association)

Risk management Know-how

Stable management of overdue · poor

Various investment product

Rapid growth of

P2P finance

Unit : KRWBillion Won

P2P Financial Institution’s Status

Section 12-2017 01-2018 02-2018

Number of

Companies

183 188 188

Monthly

Investment

US Dollar

146 Million

US Dollar

165 million

US Dollar

186 billion

Earning Rate 15.71% 15.48% 15.34%

Default Rate 1.85% 2.00% 2.36%

Delinquency

Rate

1.07% 1.38% 1.42%

I. Current State of Fintech in Korea

P2P Lending

Kakao Bank Main Product and Features

Receiving Credit (Savings)

Product Detail

Free Installment Savings Saving freely during period to make a good

sum.

2.0% Annual interest rate, 1 year maturity

Time Deposit Determining period freely and save certain

amount by once to make a good sum.

2.0% Annual interest rate, 1 year maturity

Extending Credit (Loan)

Product Detail

Credit Line(Minus Account) High-grade employees’ credit line using

scrapping

Maximum KRW 150 million, Minimum

2.86% annual rate

Credit Loan Also available for middle credit rating. Using

scrapping and no need to visit bank

Exemption from cancellation fee of early pay

back

Maximum KRW 150 million, Minimum

2.86% annual rate

I. Current State of Fintech in Korea

Internet Bank

• Domestic : Kakao Bank opened 4.35 million non face-to-face account after 100 days from beginning.

• Overseas :USA 2017 $2.1 billion, China CNY 5.2 billion –Rapid Growth Rate

Crowd Funding has settled stably and

take a role as a new financing window for

small businesses · venture companies

Crowd Funding Status. <Source=Crowdnet>

I. Current State of Fintech in Korea

Crowd Funding

Total Funding Cases Funding Total Success

Total Funding Success Amount

67.5 Million US Dollar

Funding Success Rate

(Average)

27 Million24 Million

9.1 Million

2018

2016 2017 2018 2016 2017 2018

2016: 30%

2017: 35%

2018: 34%

2019: 1 %

2016: 24%

2017: 38%

2018: 38%

2019: 1 %

20192019

2018

837 Cases 487 Cases

0.17 Million

Global :USA2017, $ 300 billion, 150 companies -Capturing Half of Global Market Share

Domestic Robo-advisor Market Scale Progress (Unit : US Dollar)

77Million

120Million

186Million

289Million

450Billion

Robo-advisory Test-bed Rate of Return for 5 Months (Unit : %)

Type Algorithm Rate

Domestic Data and Analytics FASST Korea 9.7

Kium Momentum 6.3

QV Pension Portfolio 6.2

KFI I77 6.0

KB Robo-rider 5.9

KODEX Robo-solution 1 5.5

Daishin Robo-balance 5.4

Kium Multi Asset 4.4

KEB Hana_Craft Asset Allocation Alpha 4.1

Samsung POP Robo Stock Fund 3.2

Overseas KimRobo Global 01 9.1

December USA Stock Solution 4.3

ATOM Global Dynamic 2.5

* 22-May-2017~26-Oct. Source : Koscom

I. Current State of Fintech in Korea

Robo - Advisor

Online(CM) Other(TM, etc)Source : KLIA

E-insurance Market Registered Service Status(Rate of Change)■ Open (23-Nov, 2015)■ Present (29-Jan, 2018)

Moving Patterns ina buying insurance website Unit : 1,000(Component Ratio, %)

Car Insurance

Term Insurance

Traveler’s Insurance

Simple Actual Expense Insurance

Annuity Insurance

Deposit Insurance

Overseas:ICT companies such as Google, Apple actively advanced in Insurtech.

China Zhong An Insurance is No.1 in global Insurtech.

I. Current State of Fintech in Korea

Insurance (InsurTech)

* Active private environment composition by Fintech startups :

KORFIN, Fintech Forum 6.6 trillion14.8 trillion

24.4 trillion

34.7

trillion

44 trillion

(estimated)

‘14 ‘14 ‘15 ‘16 ‘17

46

99

80 76

18

13

178

60

8397

67

Transaction value (unit:

trillion won)

Number of transactions

(unit: billions)

’12 ‘13 ’14 ’15 ‘16 ‘14 ’15 Jan’16~’17‘13 ’14 ’15 ‘16 Bank Card Security Insurance

Robo - Advisor

I. Current State of Fintech in Korea

II. 4th Industrial Revolution and Financial Innovation

Wikipedia

Davos Forum

II. 4th Industrial Revolution and Financial Innovation

Definition of 4th Industrial Revolution

II. 4th Industrial Revolution and Financial Innovation

Background of 4th Industrial Revolution

Big Data Construction

Artificial Intelligence

Development of

Optimized and

Cutting-edge

Technique

Internet & Mobile

Platform

By using optimized technology based on ICT(Internet, Mobile), productivity has been dramatically improved not only for

manufacturing business but also distribution industry which connects production and consumption

II. 4th Industrial Revolution and Financial Innovation

Digital Platform Revolution+ infra-structure Technology Revolution

By using optimized technology based on ICT(Internet, Mobile), productivity has been dramatically improved not only for

manufacturing business but also distribution industry which connects production and consumption

Sharing

Economy

Expansion

The 3rd Service

Distribution

Revolution

O2O Industry

Activation

WTP

Product Competitiveness

: Price, Quality

Fintech, Delivery

WTO

Product Competitiveness

: Price, Quality

Market Digital Market

II. 4th Industrial Revolution and Financial Innovation

Ubiquitous Structure in 4th Industrial Revolution Era

Demand(Consumption)

Side

Supply(Production)

Side

II. 4th Industrial Revolution and Financial Innovation

4th Industrial Revolution with ABCDInnovation

Leverage Effect

+

Fusion Effect

Fast Emergence

of New Technology &

Short Business Life-cycle

• expandability without time & space limitation

• New opportunities for business by fusion with other industry

• The risk of lagging behind, if not going with main stream

• Need new innovationengine continuously

No Restriction in

Time and Space

No Delivery Time

& Digital Speed-up

Customized Mass

Production by

ABCD Innovation

Exclusion of

Third Party

Disintermediation

III. Fusion with New Technology

III. Fusion with New Technology

Deregulation on New Financial Technology

• No-Action Letter : Active interpretation for the new financial service

• Financial Institution Test : Authorization of using financial institution service and demonstrating service operation

• Authorized Agent : Demonstrating service of financial institution on the condition of meeting the requirements

• Financial Big Data Activation: Introducing information process to be anonymous and with a false name

• Strengthen Competitiveness of Financial Data Industry : Promoting competitiveness of CB industry specialized in non-

financial information

• Simplification for a Consent Form of Using Information

III. Fintech Innovation & Special Act for Fintech in Korea

Robot+Advisor

• Cloud system is an compute environment that multiple users can access the IT data more elastically.

• Data storage is expected to Boom in 2018 as cloud services become an integral part of business operations.

☞ Many Companies are expect to open Data Centers with

higher capacity storage.

Chat+Robot

CustomerService

Messenger

Automated Investment

Consultation

· Appearance of ChatBot & Robo-Adviser

· Supporting corporates decision with combination of IT and other Technology· Active usage on individual financial services.

· 21st Century, The Era of Block Chain

· The Prevention of Security Risk by Block Chain

· Cost Reduction on Intermediary Fee

· Available on all Bank, Securities, Insurance

Industry

· A Technology that Extracts and Analyzes the Value of a Large Set of Data.

· March 2018, Financial Services Commission (Korea) Opened Financial Corporates’ API to Fintech companies.

4th Industrial Revolution with ABCDInnovation

III. Fusion with New Technology

Robot+Advisor

• Cloud system is an compute environment that multiple users can access the IT data more elastically.

• Data storage is expected to Boom in 2018 as cloud services become an integral part of business operations.

☞ Many Companies are expect to open Data Centers with

higher capacity storage.

Chat+Robot

CustomerService

Messenger

Automated Investment

Consultation

· Appearance of ChatBot & Robo-Adviser

· Supporting corporates decision with combination of IT and other Technology· Active usage on individual financial services.

· 21st Century, The Era of Block Chain

· The Prevention of Security Risk by Block Chain

· Cost Reduction on Intermediary Fee

· Available on all Bank, Securities, Insurance

Industry

· A Technology that Extracts and Analyzes the Value of a Large Set of Data.

· March 2018, Financial Services Commission (Korea) Opened Financial Corporates’ API to Fintech companies.

4th Industrial Revolution with ABCDInnovation

• Opened in Sep-17 as the 1st

in industry

• Offering foreign exchange,

smart/internet banking

counselling service

• Increased employees’ work

efficiency

• Mobile management secretary

• AI robots automatically notify

management information

(simple income report, card

sales detail, estimated additional

tax) refund

• ‘Stock AlphaGo’- AI chart

and promising stock pattern

analyzing system

• ‘Smartbot’- Analyzed over

15,000 type of stocks, offers

promising type and signal

• 2nd generation AI chatbot which

can communicate with

customers and analyze context

• Handles various tasks

(Checking insurance contract &

loan, repayment, product

recommendation)

III. Fusion with New Technology

A.I (Artificial Intelligence)

• Prediction and analysis of

customer’s movement in

platform

• Transaction pattern change

sensing · personalized service

• Analyzing banks’ internal and

external data from using big

data analysis and machine

learning

• Poor business rating

• Using enterprise-relevant

information for credit review

and follow-up management

• Predicting trend from collecting

· analyzing big data of portal

website search word, news,

video

• Type recommender to follow

leading stock

• AI type analysis by big data

• Created Data analysis Dept

based on ‘agile’ in 2018 as the

1st in industry and strived for big

data analysis

• Introduced powerful big data

analysis solution · data update,

and offers true client value

III. Fusion with New Technology

Big Data

• Forgery risk prevention of buying

export proceeds bond · letter of

credit issue & transaction forgery

• Cost & time efficiency at work

• Will start consulting business of

PoC(in Jun-18 unlisted bonds

model verification

• Looking for ways to take

advantage of blockchain in

unlisted stock payment system

• Operating blockchain based

‘Automatic Insurance

Payment’, ‘Smart Family

Security Analysis System’

• Cloud application business

capital management service

(CMS)

• Online processing virtual

bank branch

• 80 % cost reduction of

building server

Trade Finance

Blockchain

III. Fusion with New Technology

Block Chain & Cloud

IV. Special Act for Fintech in Korea

IV. Special Act for Fintech in Korea

Promote Financial Innovation by Supporting the Emergence and Growth of Innovative Fintech Services

De-regulating Entry Requirement , Encouraging Innovative Companies to Enter the Market

Proclaim Special Act to Compete with Global Fintech Companies (2018.12.31)

Main Contents

2. Designated Representative

• Authorization to Designated Representatives to do financial corporations’ Essential Work

3. Prompt Check on Regulation

• Prompt Check Service for Companies that facing problem on applicability of law.

1. Innovative Financial Service Designation

• Authorization of Pilot License & Regulation Exception to test on market and consumers

Overview of Special Act for Fintech in Korea

IV. Special Act for Fintech in Korea

Authorization of Pilot License & Regulation Exception to Test on Market and Consumers

27

Fintech Corporations &

Financial Corporations’

Participation Apply

Evaluation on Service Innovation,

Customer Efficiency, Customer

Protection, Market Stabilization

Pilot License & Regulation Exception

on Innovative Financial Service

Give Authorizations to business

which has Consumer Protection Plan

& Risk Managing Plan

Simplifying Licensing Procedure, If

needed Law Legislation Suggestion to

Administration

Consumer Damage, Financial Market

Confusion, etc. Supervision

Mechanism

Innovative Financial Service Designation

IV. Special Act for Fintech in Korea

Authorization to Designated Representatives to Do Financial Corporations’ Essential Work

Examples of Essential Work

(Banks) Deposit, Installment, Savings, Securities Issuance, Account Establishment and etc.

(Insurance) Insurance Acquisition Status, Screening, Insurance Contracts and etc.

Financial

Corporations

Fintech

Corporations

Financial

Corporations

Essential

Work

Designated Representative

IV. Special Act for Fintech in Korea

Prompt Check Service for Companies that facing problem on applicability of law

Other Administrative

ⓐ Request for Application of Law

Fintech Companies ⓑ Reply within 30 DaysFinancial Services

Commission

ⓐ’ Request- If under other administrative jurisdiction

ⓐ’ Reply within 30 Days

+30 days, if Request is under jurisdiction of other administrative

Prompt Check on Regulation

V. Introduction of Fintech Center Korea

Slow Growth

of Fintech

Industry

Fintech Center Korea

Lack of Understanding

(Financial Industry)

Difficulties on Cooperation &

Alliance

Lack of Understanding

(Patent, Law etc.)

Financing Difficulties(Loan etc.)

Fintech Startup

V. Introduction of Fintech Center Korea – Background of Establishment

Policy agencies(2)

Banks(10)

Credit Card

Companies(5)

Securities

companies(9)

Insurance

companies(10)

Associations

/ Related Institutes

(12)

Domestic -

Allied agency(35)

Aboard -

Allied agency(13)

V. Introduction of Fintech Center Korea – Background of Establishment

Consulting

Demo Day

(30 times)

1-on-1

Mentoring with

Prep

entrepreneur Start up

Finance Company

V. Introduction of Fintech Center Korea – Background of Establishment

Company Nation Contents Company Nation Contents

Gmoney

Trans

Cambodia

Launching foreign exchange remittances

service with Cambodian bank “Wing”Interpay

UK

Contracting joint marketing with Trustonic & Interced

KosignLaunching IT outsourcing business

with Cambodian banksCorbit

Offering global transfer service between Asia-Europe-Africa

through alliance with BitPesa (UK)

ScaleChainLaunching cloud platform business

with Cambodian banksCoinPlug

MOU with Circle UK for the development of blockchain-based

international remittance & document forgery prevention solution

SendbirdLaunching alliance message service

with Cambodian banks Sentbe

Developing with Cryptopay & GBG GB-Philippine

blockchain-based international remittance

Lockin

Company

Launching alliance mobile App security

service with Cambodian banks Streami MoU with Coinfloor and ZEN9 for joint Blockchain research

JYTech

Singapore, UK

Developing debit card issuance/payment

system for mobility platform & attracting

investment from SC (250 thousand USD)

AT

SolutionsMaking TZ certification MOU with Trustonic(UK)

ForcsDeveloping electronic document solution

(OZ e-form) for mobility platformPaycock US Making payment infra network MOU with IDX (Guam)

Everspin UKEntering into partnership with Oracle

for joint research/marketing for overseas

expansion

PopPay USOffering “PopPay“ payment solution to merchandisers

(e.g., fast-food restaurant, food truck) in San Francisco

KTB Solution US, EuropeResiding at Level39, Awarded grand prize

at Citi Mobile Challenge Certification Finotek

US,

Germany

Making contract with Amazon.com for certification service,

Establishing joint corporation with “Fintech Group”(Germany)

(Dec 2016)

Overseas Expansion

V. Introduction of Fintech Center Korea – Background of Establishment

Thank you