Rivalry between banks and big tech casts a cloud over state-backed loan exchange platform

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The government’s plan to consolidate lending products under a single platform by October to help consumers easily compare available options faces headwinds from traditional banks and their tech rivals as a result of their already competition. stepped up to take over digital finance.

The “mobile loan exchange platform” promoted by the Financial Services Commission since January is a mobile application, through which debtors can browse the number of available loan products and easily transfer their current credit loans to those with a lower interest rate, without having to visit offline bank branches or other financial institutions.

Managed by leading tech and fintech companies in cooperation with the Korea Financial Telecommunications and Clearings Institute – a nonprofit under the FSC, which operates several interbank payment systems – the new contactless service is expected to improve consumers’ access to services. financial services, the FSC said in a statement.

Despite good intentions, the government faces a bumpy road as traditional banks have expressed skepticism about the project, citing high commission fees they may have to pay tech players to participate in the platform. shape, according to industry sources.

In addition, banks are reluctant to share customer information with large tech and fintech companies, which is necessary to run the loan exchange program, for fear of possible leakage of their trade secrets or information. internal confidential, they added.

The FSC responded to opposition from local banks by stating that “banks will play an important role in the implementation of the platform. We will take the views of the banking industry into account when selecting technology companies to operate the platform. “

“Banks and big tech companies demonstrated a power struggle when the FSC attempted to launch the current open banking system in 2019, but the system eventually got its feet on the market. The two sides should review the future loan exchange platform from the point of view of consumers. “

Currently, the country’s top five lenders – Shinhan, KB Kookmin, Hana, Woori and NH NongHyup – are not considering joining the government-backed loan exchange platform. In the meantime, the Korean Federation of Banks, a representative body of 60 banks operating in Korea, plans to develop a separate loan exchange platform as a counterattack against big tech and fintech companies.

A number of internet-only lenders, including KakaoBank and Toss Bank, however, have decided not to partner with KFB, fueling the ongoing feud over the loan exchange platform.

As traditional banks and their tech rivals push for separate mobile loan replacement services, speculation is mounting that the government may delay the launch of the platform scheduled for October.

“Given the growing concerns of banks about the loan exchange platform program, financial authorities should not unilaterally pressure it. They should come up with specific measures to ease the burden on banks, including commission fees,” in order to successfully achieve their original goal, ”said Kim Sang-bong, professor of economics at Hansung University.

By Choi Jae-hee (cjh@heraldcorp.com)

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