Traditional financial and rising platform-based players clash over a new state initiative to promote fintech, with the former complaining of reverse discrimination as they confront fast penetration of big tech names in the financial landscape.
Financial firms are arguing that dominant tech companies like Naver and Kakao too should come under the so-called 25 percent rule that limits a bank’s sales of a certain insurer’s products at up to 25 percent. The rule was introduced to deter too much growth of a particular insurer and shady alliance of an insurer and bank but would be exempt for big-tech companies.
But the tech giants contest the rule does not apply to them because they are just advertising products and not selling or brokering, and they receive platform fees, not brokerage fees.
Existing financial companies grumble that the fintech service providers are exempted from the rule requiring companies to broker loan products of only one institution, which would allow them to gain the upper hand in the market by providing low interest rate and attracting more customers.
An official from the financial sector said that the government should apply the exception only to small-scale fintech startups, not to tech giants, because they can unfairly dominate the market.
Credit card companies also say that the nation’s financial authorities are discriminating against them by exempting simple payment platform operators from the equity capital rule that prevents credit card firms from holding assets six times bigger than their equity capital. But tech companies refute that deferred payment is not a lending service but a micropayment service enhancing customer convenience, and they are subject to separate rules for their own business.
Pulse by Choi Seung-jin, Lee Sae-ha and Choi Mira(2020.07.28) Traditional financial players complain of reverse discrimination in fintech exemptions
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