The United States, Singapore and the United Kingdom have all been striving to transform their leading cities into financial technology hubs. This fintech initiative can change the international business ecosystem, in addition to the positioning and ranking of global cities.
So far, Asia does not have a clear fintech hub. Even though fintech investments in some Asian Countries like India, China and Singapore have increased, Korea still has a chance of being a fintech hub in the region.
According to Accenture report, Asia-Pacific’s fintech investments more than quadrupled to reach $4.3 billion in 2015. The report also found that global fintech investments increased by 75% in 2015 to reach about $22.3 billion.
Associate director of Z/Yen Group of Companies, Mark Yeandle, said, “Fintech is certainly going to be a game changer. However, it is hard to predict how it will affect the competitiveness of financial centers.”
According to a KPMG Fintech 100 report released in December last year, only 12 companies were from Asia. The composition of the other companies was as follows: the Americas – 40 companies; Europe, Middle East and Africa (EMEA) – 20 companies; UK – 18 companies; and New Zealand and Australia – 10 companies. There was no Korean company on the list and only two Chinese companies made it to the top 100 list.
The results reveal both the positive and negative factors faced by Korea. From the positive perspective, they show the failure fintech startups, as well as the government, to recognize various opportunities created by this globally growing market. Therefore they do not understand how to adapt to the current trends in the financial services industry.
The government does not have a clear, long-term fintech vision forthright. The industry cannot boom without appropriate regulatory plans that create a conducive environment for innovation. Also, fintech startups are more focused on internal success, which makes them a bit lacking in the global competition front.
Jeffrey Jones, lawyer at Kim & Chang, said, “Despite the tremendous IT infrastructure and technological capabilities, the regulatory environment is not conducive to innovative fintech business models.”
Korea has a chance of becoming Asia’s fintech hub if it creates suitable regulations that will assist its companies and take advantage of the country’s IT expertise.
Korea should invest in becoming Asia’s fintech center because:
1. It can attract investments from all over the world, thus driving and boosting its sluggish economic growth, which is projected to grow by about 2.6% this year.
2. It can reduce the unemployment rate among youths by increasing the number of college graduates who can take part in inventive fintech businesses. This will equip them with the necessary expertise to work overseas and create global connections.
3. It can make the Korean economy more flexible and responsive to external chances through promotion and development of creative small business initiatives.