Major concerns of FinTech (Financial Technology) services in the Korean market

Abstract

Technological innovation is the driving force of FinTech's growth. FinTech (Financial Technology) provides easing payment processes, reducing fraud, saving user’s money, promoting financial planning, and moving a giant industry forward. FinTech is receiving a lot of attention in the finance and IT markets in the world. However, main concerns of FinTech services are regulations and technical problems such as government regulation, the security of customer's money and investments, protection of customer's data, cyber-attacks, lack of expertise, and so on. Especially, the major issues of FinTech are security and stability which are essential as well as ease of use. No matter how they introduce new technologies and user convenience, FinTech got the trust of our customers. As a leader of FinTech, we discuss the major concerns of the FinTech security with Korean market case. Also, regulation has slowed the development of the FinTech industry. With the unreasonable regulation system in Korea, FinTech is in a lot of controversies between finance and industry. People in Korea have already had a significant amount of experience with FinTech. The most prevalent examples of FinTech in Korea are Internet & Mobile Banking and shopping with the mobile payment market. In this paper, we discussed institutional and technical issues that should be considered for a successful settlement in Korea and suggested how to carry out an unprecedented financial regulation innovation for the activation of FinTech to activate and successfully establish FinTech. Corresponding author: June-Suh Cho Email addresses for the corresponding author: jscho@hufs.ac.kr First submission received: 6th August 2019 Revised submission received: 4th September 2019 Accepted: 9th September 2019 Introduction The platform that uses FinTech around the world is growing more and more over the years. Today, people do not visit banks to deal with their financial affairs. Mobile FinTech service enables you to check banking businesses anytime without being limited by time and space. In the global financial market, FinTech is evolving the financial industry, creating a mobile revolution that transcends time and space. FinTech is a combination of finance and technology. It covers financial services through the convergence of finance and IT, and changes in industries based on these services. FinTech's principle is to transform centralized financial services into P2P distributed services, which is a major distinction between electronic finance and FinTech. Recently, there are financial services such as mobile banking, app cards, personal property management, crowdfunding, robo-advisor, and so on. The industry changes include providing financial services such as payment and settlement systems, remittance directly to users using technology possessed by innovative nonfinancial corporations, such as Apple Pay and Samsung Pay. (Lee & Kim, 2015; Ma & Liu, 2017) If traditional financial services are conducted facing customers directly at the bank, it is at the heart of FinTech that everyone can enjoy the same services without time and space limitations. "Now the bank is going to be invisible to the customer." Instead of disappearing physical space, virtual banking, which incorporates artificial intelligence, speech recognition technology or biological functions, is becoming a reality. The era in which the bank monopolizes monetary policy is gradually closing. Journal of Business and Retail Management Research (JBRMR), Vol. 14 Issue 1 October 2019 www.jbrmr.com A Journal of the Centre for Business & Economic Research (CBER) 124 In Korea, FinTech services such as Kakao Pay, TOSS, and Bank Salad are gaining great popularity due to the ability to access financial services more quickly and conveniently. Kakao Pay, which started its services in 2014, is a FinTech service that allows users to make payments by simply inputting the password when purchasing goods or transferring them to another account after registering their credit card information in the KakaoTalk application. Also, it provides a simple remittance service. Users of the TOSS application can take advantage of the bank's automatic withdrawal service (CMS) feature without an authorized certificate, allowing them to send money in just 30 seconds. To compensate for the instability of the security system without an authorized certificate, TOSS maintains a high level of security with only three certifications: mobile phone occupancy certification, account occupancy certification, and identification system. In 2017, Rainist, a Korean company specializing in FinTech, launched a bank salad and provided an asset management service through an application that automatically records and analyzes the user's deposit, withdrawal, and transfer history. It is convenient because you can see all the transaction information of all financial companies just by linking the first official certificate. As a smartphone has become popular in recent years, FinTech provides a variety of practical FinTech financial services such as big data, platform, cloud funding, simple settlement and remittance service, and the development is different day by day. Regulation has slowed the development of the FinTech industry, and security and privacy issues continue to be pointed out and focused on remittance and payment services. In this paper, we discuss institutional and technical issues that should be considered for a successful settlement in Korea. Also, it presented the development direction of Fintech's prospects and issues in Korean market.