Which came first, the chicken or the egg? This most representative proposition explaining the dilemma of causality suddenly came to mind. This happened not because of the egg pesticide issue, but during a discussion on mobile finance. One side argued that mobile finance would quickly become active if the government simply overhauled the regulations, while the other side countered that instead of constantly trying to change the laws, it would naturally become active if people started using it more often first.

In other words, is making someone write more important, or is writing more important? That is the question.

China is hailed as an advanced nation in the mobile financial industry. This is understandable, as Chinese companies, including Ant Financial, occupy the top spot among global fintech firms, with four of the top five companies positioned there. China has the world's largest digital fintech user population (69%), accounting for over 700 million people (even more surprising is that half of the population makes up that number). With 470 million people using mobile online payments, China ranks first in four of the five major fintech sectors: remittance/payment, financial planning, savings/investment, loans, and insurance.

What about Korea? In terms of digital demographics using fintech, Korea records 32%, which is below the average of 21 countries (33%). With the usage rate of smartphone banking increasing, there was a significant rise in 2016 amidst the fintech craze, and with the successive launches of K Bank and Kakao Bank this year, the mobile financial industry is once again facing a boom(?).

However, government regulations are cited as the biggest reason for the continued sluggishness of mobile finance in Korea. For example, around 1998, PayGate and Interpay were launched domestically alongside overseas competitors such as PayPal and Stripe, and around 2006–2007, Lending Club was launched overseas and Money Auction in Korea at similar times, but they failed to commercialize their services domestically due to conservative financial regulations.

In contrast, the reasons for China's emergence as a world-class nation in the mobile financial industry are often sought in various aspects, including talent, capital, policy, and demand. Among these, the Chinese government actively promotes innovative systems. Although regulatory authorities have recently been gradually tightening regulations, they have consistently implemented favorable regulations. Analysis suggests that China was able to develop primarily through comprehensive policies restricting foreign competition and investment, which supported the formation of its vast e-commerce market and digital economy; furthermore, by establishing a low corporate tax rate (15%) for new fintech companies and startups, as well as innovation funds for emerging industries.

There is much debate on this matter as well. It is said that the financial environments and legal systems of China and Korea are different. As a prime example, China employs a "negative regulation" approach where regulations dictate "do not do this," which, conversely, implies that everything is permitted "except for that." In contrast, Korea follows the opposite "do only this" regulation, deeming everything else illegal. Therefore, the logic is that regulations must be loosened through a forward-looking shift in thinking to outperform China.

Reasons why fintech services are not frequently used even when they exist

It is pointed out that the differences in the financial environments of the two countries have also contributed to the current situation. Although China is moving toward a cashless and credit card-free society, its credit card issuance standards are so strict to begin with that the issuance rate falls short of 10%, and even ATMs and banks are unable to distinguish between counterfeit and genuine yuan. This contrasts with our situation, where banks are readily available just outside one's doorstep in most cities, and one can obtain a credit card if they so desire. The argument is that for countries with vast lands like China or those with underdeveloped financial systems, transitioning directly to a mobile financial environment may actually be easier.

The CEO of a domestic fintech company pointed out that a characteristic of our mobile finance is that even when services exist, they are not widely used. In one survey, the most common reason cited for avoiding mobile finance was security concerns. This implies that instead of merely creating regulations, we must ensure that services can be used safely in practice. This is because once widespread use occurs, the market is bound to expand. In other words, the goal is to make it easy and convenient for anyone to use; the argument is that, for instance, places like department stores should proactively ask customers about their fintech payment methods, and the government should provide tax benefits to such companies.

If the law is completely overhauled to force people to use mobile finance more, will usage increase, or will encouraging people to use it on their own lead to an increase in users and naturally result in amending the law? It is not easy to judge which comes first, but I believe the most important factor is the user. The recent sensation created by Kakao Bank can be cited as an example demonstrating what domestic mobile finance consumers want. Kakao Bank announced that as of the 23rd, its deposits and loans had surpassed 3 trillion won, with a total of 2.91 million new accounts opened. Government authorities and fintech companies should take deep thought to the reasons why so many customers have chosen Kakao Bank less than a month after its launch.