Money 20/20 Korea: Predicting the Future of Fintech
By: Tuulia Salo
Tags: Fintech, Blockchain, Finance, Technology, Banking

On Tuesday 26th September 2017 Bitcoin Center Korea had an opportunity to participate in an event held by Money 20/20 that was in Korea for the first time ever.

Money 20/20 organizes the largest global events enabling payments and financial services innovation for connected commerce at the intersection of mobile, retail, marketing services, data, and technology. In October 2017, Money 20/20 will have an event in Las Vegas where some of the influential speakers from Silicon Valley will be attending to speak and discuss about the hottest topics involving fintech, blockchain, and innovations within the startup scene.

Money 20/20 connects people globally (Image credit: Kelly Belter)

The people behind Money 20/20 noticed that there were events only for some specific target groups, for instance banking or startups companies only. For this reason, Money 20/20 wanted to connect people from different communities such as technology, financial, and payment services. Money 20/20 noticed the urgent need of these groups to communicate each other for building up a better future for fintech solutions.

“ Money 20/20 is that space — where technology meets money, money meets people, people meet ideas and ideas become reality. This is where the entire payments, fintech and financial services industry connects. Everyone is here, every time.”

Pat Patel, the Content Director of Money 20/20 Asia & Europe, started the event by bringing up the importance of rapidly changing fintech industry:

“Bitcoin has become a successful and good business due to blockchain technology. The importance of proof of concept has started to interest different companies as well. Industries want to know what the value is in these and how organizations can be part of the blockchain and its technology. For example, a few years ago I would have not invested in bitcoin because I thought it had problems to take it to the next level. And now, look at where bitcoin is!”

Panel Discussion — The current and future commercial value of fintech:

The speakers at Money20/20 Seoul from left to right: Jae Yong Lee, Seung Gun Lee, and Joey Kim

Jae Yong Lee, CFO & CSO of JB Financial Group

“JB Financial Group is the smallest banking group in Korea but we consider ourselves as a very aggressive banking group in South Korea. We have two commercial banks. We also have an SME management company and some of our locations are in South East Asian countries such as Cambodia, Vietnam and Myanmar. We like to focus on the players who change the fintech world. We established an open banking platform and offer the platform for e-commerce, third parties, etc., and that’s how we want to share the processes and licenses to fintech.”

Seung Gun Lee, CEO & Founder of Viva Republica, Toss

“At the moment we are at 11 million won and we have 20,000 users everyday. The transaction volume per month is 800 million won. We grow 10–15% every month. The transactions made by our users are around 60 million won even though we have only operated in South Korea. We [have started] those kinds of things like Mint, financial dashboard, credit management systems. We try to achieve much better accessibility to financial products and services, like banks and fintech companies. For that reason we sell savings accounts, financial products and also micro investment features in real estate and all other things that area related to lending, credit data as well as insurance area. The growth has been 95% in 5 months.”

Joey Kim, CEO & Founder of PeopleFund

“PeopleFund was established in 2014 but we started our service last year in 2016. We connect people in need for money. People who want to invest money to make returns. We do SME loans and personal secured loans, real estate as well. We cover all the fields that need financing. We have lent 11 billion won and we have been making money since then. In Korea, we can see many people doing traditional money borrowing.”

Patel: What will have the biggest impact on Financial Services in Korea in 1–2 years?

Seung Gun Lee/Viva Republica: The bank is making money from selling their branches and products and they can only get a small profit from the interests. I think P2P lending might be one of those that has the biggest impact in the future. I believe in a good user base. For instance, Alipay made 90 billion USD only in 9 months. When you have a good user base, you can make money. Joey Kim/PeopleFund: I also agree with the idea of building the platform in user base. We definitely need better financial services fast in South Korea. From my perspective, the business that I do, we create value from something that we can’t see in the market. There are so many people who are not willing to lend money to others, for example to the smaller enterprises but we do it with a 10% royalty fee to asset secured loans. We lend money to the people who would not get it from the bank at a good rate. We try to capture the value in the market and try to make it as a product. Customers are willing to invest in the products. They want better service and loans. We can co-operate with the platform. In the future, I think the products are in the main role in the market. For example, JB Financial Group has been an excellent partner for helping us start this company. Jae Yong Lee/JB Financial Group: My approach to this analysis is very traditional. It’s obvious that the revenue usually comes from the fees but fintech wants to challenge the traditional way and get revenue from interests or other sources of revenues. However, if we only focus on these things the whole system is based on how many customers you are able to get. If you are willing to expand to the fintech area, you will receive a lot more additional income. I strongly believe that fintech has all the possibilities in this. It’s impossible to predict the future and know all your enemies.

Patel: What do you think about the regulations in South Korea?

Jae Yong Lee/JB Financial Group: The regulations in South Korea are not exceptional. The biggest problems comes from the privacy issues that include personal data. We should agree about the right instructions and tools for protecting the privacy matters. For example, China has no regulations for these and other businesses can be really successful there. The other problem is that the current banks that are not happy with dealing the regulations because they need to protect the market and the operations. I believe we need better social agreements between the customers and the bank; the government and fintech. We need to think of what is good for customers. We need to develop processes for helping get the ideas more functional. The most important thing is to remember the customers. Data will be open and shared, it’s just the matter of time when this happen Seung Gun Lee/Viva Republica: They are getting pressure from regulations in China. Regulators are already aware of the fact that fintech is something you need to make better. I had an opportunity to be a chairman in the Korean fintech Association and we discuss about significant matters, bold and crazy things. We are aiming to be approved by the congress in June next year in 2018. At the moment, financial services are dominated by the banks and they dominate the financial infrastructure and also the financial services.Some of the ideas we have been talking about are such as that the third parties could get access for any financial information from any place in financial institutions. The law is enforcing the banks and any other companies to share their data with fintech companies if the third party has the user consent. This model would change a lot of things if this came to South Korea. In this case the financial service area and the financial infrastructure would be separated if this was implemented in South Korea. There would be so many different corporations that offer financial services in South Korea. Just like in US and Europe there would be huge mega companies around financial services. I’m really looking forward to the changes in regulations. Joey Kim/PeopleFund: It took 18 months for PeopleFund to go through all these current regulations in South Korea to just be able to borrow money from the banking process. We had to change our business model and the structure of the loans according to the requirements. This tells a lot about how regulations work in South Korea. We are trying to make the change on a really mainstream level.

Panel Discussion - The current and future commercial value of FinTech in South Korea

Patel: We asked the same question “What will have the biggest impact on financial services in Korea in 1–2 years?” from the audience here, and for the results we got blockchain as number 1. Are these results something that you were expecting?

Joey Kim/PeopleFund: blockchain and cryptocurrency are growing in South Korea and I think it has the most growth in the entire world at the moment. The Korean financial industry has always had an issue with the personal verification. But now it’s changing a lot and I believe blockchain might be a game changer here. Many payment systems don’t work well on applications, but blockchain can make the difference in improving the verification issues. For that reason, [I believe] the audience set it as number 1. Seung Gun Lee/Viva Republica: If something is impacting on something, it tells about the distribution. It should be well distributed. In terms of that, I think blockhain, open APIs or artificial intelligence are in a pre-commercial phase in distribution. Blockchain is not yet really well distributed in the market and for that reason I’m afraid it will not change the financial services that much in the next 1–2 years. However, when it’s well distributed then it will change everything forever. Jae Yong Lee/JB Financial Group: The new processes and new values are in the main role. For me, blockchain stands for freedom of the current operations. We need to know what blockchain and cryptocurrency really do. We just can’t think of technology itself.

Patel: We have a question for Seung Gun Lee. How did you build your trust and credibility from users?

Seung Gun Lee/Viva Republica: We tried so hard but we always failed. Building trust is just not possible in an early stage. Our strategy was to think through the convenience and user experience. This way we could empathize it with the value, even though it’s not so a sustainable service, but when the amount of users grow, it will show the trust to the other people. Convenience and willingness to go further are in the main roles. You should just focus on the value where you are way better than anyone else.

Korbit:

Tony Lyu, CEO & Founder of Korbit, was one of the speakers at the Money20/20 event. Korbit is Korea’s first digital asset exchange that was founded in 2013. It is currently handling 11 digital assets and they have over 40,000 active traders and over $10B cumulative trading volume.

Tony Lyu, CEO & Founder at Korbit

“Korbit’s mission is to enable the free flow of value by utilizing new technologies such as bitcoin and the blockchain. Starting with financial services, we are creating a world where individuals can transact with each other freely, without sacrificing security or convenience.”

Tony Lyu speaking at Money20/20 event

He talked about how global wealth is moving into blockhain-based digital assets. On his speech he referred to the surveys and statistics made by Anonymous NEXT that is analyzing ICOs and the token market. We have posted some of the pictures from his presentation down below.

Tony Lyu started his speech by mentioning that it has been estimated that 10% of the global wealth will be in blockchain within 10 years and it’s clear to see this trend already happening. Entrepreneurs are receiving more money through ICOs more than they are receiving money from capital firms. This is a big trend on this year. South Korea has become a major market in cryptocurrency trading by having the biggest amount of cryptocurrency trading fiat market share for exchanges with fees being at 37%, leaving China behind at 31.4%. South Korea is a leading country in using blockchain.

Until 2017, all the token launches taken together were less than 1% of global crowdfunding activity, suggesting meaningful opportunity (Source: Autonomous NEXT).

The difference between investing in stocks and tokens is that if you invest stocks, you invest in organizations and companies. When investing in tokens, you don’t invest in a company. The company is usually a non-profit organization and for example, if there’s an application you actually get the currency of the application or some other type of utility of the application. You are not buying the application, you are buying the currency used by the application. South Korea has showed the biggest growth in the past year in a market.

The difference between investing in stocks vs Tokens (Source: Autonomous NEXT).

“Usually South Korea doesn’t lead the world in the financial services but in the blockchain space, South Korea is the global leader. As a country we can think of the ways how to become competitive in the future.”

***At the time of this article, ICOs had not been banned in South Korea just yet. With recent news coming from the financial and regulatory commissions, it’s hard to say right now how much it has affected the cryptocurrency markets in Korea***