Created in March 2015, KB Financial Group’s KB Fintech Hub Center has been discovering and promoting fintech startups and building cooperation systems in order to help fintech put down roots in South Korea.
The KB Fintech Hub Center (hereafter KBFHC) has emerged as an important cog in KB Financial Group.
To learn more about KBFHC, The Korea IT Times arranged a meeting between Kwon Hyuk-soon and Kim Hyoung-joong on April 12 at KBFHC in Seoul.
Kim: Major financial groups are jumping into the fintech fray. I’d like to learn about KF Financial Group’s fintech capabilities and the roles of KBFHC.
Kwon: All of KB Financial Group affiliates are capable of offering fintech services. Though, that doesn’t mean that each affiliate has professional fintechers on standby. Our center is supervising and coordination our group’s fintech projects to prevent affiliates adopting overlapping finteh services. Many fintech firms have differentiated technologies and services, but they just don’t know where they can find their customers and who their customers are.
There are many financial companies under KB Financial Group. If those fintech firms come to our center, we match them up with KB affiliates. Our center has been rigorously assisting KB Financial Group in embracing fintech.
Banks are so conservative that they prioritize protecting customer deposits
Kim: Since banks manage customer deposits, they are subject to government safety regulations. Thus, many think that banks have reservations about introducing new services. It is also said that fintech companies get the upper hand on financial incumbents when it comes to fintech. What’s your take on such views
Kwon: Financial institutions feel obliged to protect customer deposits so that they basically take conservative approaches toward new services. For example, they worry about fingerprint theft when considering the introduction of a new fingerprint-based simple payment service.
If I can speak for banks, I think banks take safety issues seriously rather than act passively. Unfortunately, banks’ efforts to protect customer assets can be viewed as passive by third parties.
Kim: Strict regulations are in place in S. Korea, so bank presidents or security chiefs are held accountable and punished for personal data leaks. Therefore, many point out that banks tend to play it safe rather than taking risks since risks trump benefits when they try to launch a new service.
Kwon: I beg to differ. Banks work to come up with fallback plans like personally unidentifiable information. Protecting customer information is a prerequisite for banks. Developing new, differentiated services and marketing them is any company’s mission. I cannot help other businesses viewing banks as a bunch of conservatives. Banks are grafting fintech onto their services at a moderate or even somewhat slow pace. However, their emphasis on protecting customer information is slowing the process.
KB Kookmin Card takes charge of the K-Bank project.
Kim: Though a bill to ease the strict separation between financial and industrial capital is still pending at the National Assembly, you are intent on launching the nation’s first online-only bank. Please tell us about your K-Bank project.
Kwon: As of now, KB’s Strategic Planning Department is in charge of the K-Bank project.
KB is not a major shareholder of K-Bank. KB holds a 10 percent stake in K-Bank. KB is not in a position to make decisions. KB Kookmin Card will take charge of K-Bank’s card business.
Kim: Online-only banks will furnish customers with easier access to financial services. However, some worry that it could result in massive layoffs.
Kwon: There will be rivalry between online-only banks and incumbent banks. Online-only banks will offer some banking services and mid-interest rate loans, thereby penetrating deep into the market. However, there won’t be considerable overlaps between Internet-only banks’ offerings and incumbent banks’.
As you know, incumbent banks offer both online and offline services, so incumbents will have to compete against online-only bank in some areas, not across the board.
Still, online-only banks are projected to show their strengths in specific areas. That’s why KB is investing in K-Bank. While the launch of Kakao Bank is expected to come without a payment gateway (PG), clear visions or specific directions for K-Bank have yet to be revealed.
KB spearheads S. Korea’s first securities-based crowdfunding.
Kim: I guess many fintech-based services are already available. Many believe that KB took the lead in smart one-time password (OTP) services.
Kwon: Fintech has been applied many areas, such as simple payment services, simple money transfer services, simple authentication, big data and asset management. In October 2015, startup Toss and Naver made a request for easy money transfer services. After six months of internal discussions, we accepted their requests. The problem was that Toss and Naver made a play for banking’s métiers, i.e. payment and money transfer services. Considering the possibility of future cooperation with them, we provided the services. KB was the first to introduce a smart OTP system. Unfortunately, our smart OTP was not standardized, so it’s not interoperable with other banks’ systems.
Kim: Could you tell us about you startup promotion project called “KB Starters Valley” I’ve heard that the project’s crowdfunding target had been reached earlier this month.
Kwon: Startups Geo Line and Ino-on KB are among the graduates of KB Starters Valley which kicked off in March last year. More startups will move into KB Starters Valley. We started a crowdfunding campaign on January 25. Last year, four fintech firms were crowdfunded. KB Investment and Securities also participated in the campaign.
Startups like Mobitle, Wisecare, Wisemobile and The Pay have been successfully crowdfunded. KB played a pivotal role in the nation’s first securities-based crowdfunding.
KB last year invested 1.5 billion won in bitcoin services provider Coinplug. KB bank signed an MoU with Coinplug, which has a number of patents pending related to blockchain technology.
