Seminar on China's Mobile Finance and Fintech Industry Trends Held at the National Assembly
Seeking cooperation with China, home to the world's No. 1 fintech company

China is now entering an era where neither cash nor credit cards are needed.

Chairman Oh Jeong-geun, who led members of the Korea Financial IC Convergence Society to China last July to tour the country's mobile finance and fintech industries, attended the 'Seminar on Trends in China's Mobile Finance and Fintech Industries' and described China as follows.

Even without Chairman Oh’s remark expressing surprise at the fact that the majority of Chinese people use WeChat QR codes to make very convenient payments when purchasing goods in stores, various figures represent the advanced(?) mobile financial industry of China.

According to the '2016 Global Fintech Report' recently released by KPMG, eight Chinese companies were included among the top 50 fintech firms. This ranks second, following the United States, which had 18 companies. For reference, the UK had four companies on the list. However, a closer look reveals even more surprising results. Among the top five companies, China ranked first with four firms, including Ant Financial, the world's leading fintech company, while the United States ranked second with just one. It is no exaggeration to say that China is effectively leading the global fintech industry.

Ant Financial is the financial holding company of Alibaba Group. Alibaba Group, which was launched in 1999 when Jack Ma established an e-commerce company, founded the payment service Alipay in 2004 and was listed on the New York Stock Exchange in September 2014. Since then, Alibaba has grown into a massive mobile financial group with a sprawling portfolio of mobile finance and fintech companies covering lending, deposits, asset management, insurance, and credit analysis, eventually becoming the world's leading fintech company.

Regarding this, Chairman Oh stated, “When a customer applies for a loan remotely, Ant Financial utilizes a credit analysis system based on a vast amount of big data—approximately 100,000 pieces—to determine and notify the loan eligibility and interest rate level within three minutes, and executes the loan within one minute. At the same time, by operating a risk management system utilizing artificial intelligence deep learning, we maintain a low default rate of 2.4%.” He further emphasized, “This is possible because we operate an AI-based risk management system grounded in massive big data, utilizing not only data accumulated from e-commerce but also statistics from various government public institutions, such as the National Police Agency.”

Negative regulation is a key factor behind the rapid development of China's mobile finance.

China is creating synergy by allowing industrial capital in the form of e-commerce companies to enter the financial industry, as well as permitting diversified financial operations that enable them to engage in anything necessary, such as deposits, loans, asset management, insurance, and credit analysis. Ant Financial's MyBank recorded a cumulative loan amount of 49.2 billion yuan (approximately 8.2 trillion won) within just one year of launching operations. Furthermore, P2P (Peer-to-Peer) lending and crowdfunding are also developing rapidly in China. Antshares, a cryptocurrency issued by Onchain, a blockchain and cryptocurrency development company founded in 2014, ranks 7th in the world in terms of trading volume.

Regarding China's mobile finance and fintech industries, Chairman Oh pointed out, "Negative regulation is a key factor behind China's rapid development," adding, "On the other hand, Korea is just taking its first steps, and it is regrettable that various regulations are hindering its development." This means that innovation in financial services in Korea is effectively blocked due to various regulatory barriers, such as the overly strict and outdated separation of banking and commerce and excessive personal data protection.

Meanwhile, the seminar, held to actively respond to mobile finance and the global fintech industry and to explore ways to develop the future financial industry, was co-hosted by Representative Kim Jong-seok of the National Assembly's Political Affairs Committee and the Korea Financial ICT Convergence Society.

Korea has excessively strict, outdated separation of banking and commerce and excessive personal information protection, etc.
Financial service innovation is virtually blocked due to various regulatory barriers

In his opening remarks, Rep. Kim stated, “Considering the rapid development of China’s mobile finance and fintech industries, Korea must also abolish regulations in the financial industry, such as the separation of banking and commerce, and change its regulatory system to a negative regulation system.” He added, “Furthermore, relevant laws that excessively restrict the use of big data, such as the Personal Information Protection Act and the Electronic Financial Transactions Act, must be amended to enable credit analysis based on big data.”

The event, chaired by Professor Lee Byung-hye of the Department of Digital Media at Myongji University, featured presentations on the current status and prospects of the Chinese fintech industry (Professor Moon Jong-jin, Myongji University), the current status and prospects of the Chinese mobile financial industry (Professor Kim Yang-woo, University of Suwon), and the current status and prospects of the Korean mobile financial industry (Professor Choi Kyung-kyu, Dongguk University), as well as in-depth paper presentations on cooperation strategies for the mobile financial and fintech industries in Korea and China and directions for legislative reform.