Insights into South Korea’s fintech startup scene

South Korea’s support of the fintech ecosystem originated in 2015, when the government introduced a campaign aimed at creating an environment which supported the SMEs and startup space in Korea.   This was reinforced by the country’s Financial Services Commission (FSC) which committed 3 trillion won (US$2.6 billion) to support emerging fintechs over a period of 3 years.

In a move to boost fintech development and counteract criticism of the government having “the most restrictive information protection policies in Asia”, South Korea introduced a new initiative in March 2018, allowing fintech startups to introduce new products and services without having to comply with existing regulations. This exemption will be over a 2-year period, providing that the startups apps or services are classified by the FSC as “innovative.”

Demonstrating further support, the FSC is set to introduce new regulations to assist the fintech industry.  This will be implemented through the introduction of new technologies, payments, blockchain and more. Additionally the new regulations promise to benefit consumers, improving the available service offerings while simultaneously creating employment opportunities too.

According to South Korea’s government data, Fintech investment in South Korea jumped to 777 billion won (US$722 million) as of June 2016 from 473 billion won (US$439 million) in 2015 and 87 billion won (US$80 million) in 2014.

When compared to fintech start-ups in the US or China, South Korea’s fintech industry still has a lot of catching up to do.  However, despite the extent of the fintech industry in these countries, South Korea’s fintech start up ecosystem has witnessed rapid expansion.  According to, the South Korean market’s largest segment is Digital Payments with a total transaction value of US$85,035m in 2018.  Total Transaction Value is expected to show an annual growth rate (CAGR 2018-2022) of 11.1% resulting in the total amount of US$129,383m by 2022.

South Korea has some 400 fintech companies, some of which are globally recognised companies which have reached a considerable size.

Top South Korean Startups

Some of the top startups include the likes of Viva Republica, Kakao Pay and AIM.

Viva Republica powers Toss,  the popular mobile payments platform which has transacted over US$3 billion in just two years.  In 2017, the fintech closed a US $4 million Series C funding which included investment from PayPal.

Another South Korean fintech startup AIM, a robo-advisor providing mobile-based asset management services. The service has now acquired around 2 000 users.

One of the latest innovators is South Korea’s digital bank – K-Bank which started in April 2017.  By January 2018, the fintech has exceeded its target, extending about 1.14 trillion won (US$1 billion) in consumer credit loans including deposits.  The firm has plans to expand its offering to apartment loans and credit cards during 2018.

South Korea’s leading messaging app, KakaoTalk has also established a presence in the fintech arena with its offering ‘Kakao Pay’, a payment system built into the KakaoTalk messenger app.  This fintech offering provides services such as peer-to-peer payments, paying bills, membership benefits and more.

Kakao Pay provides cutting edge technology.  Last year this fintech rolled out a blockchain-based mobile authentication service, reaching one million users in early March 2018 for its Kakao Pay Authentication product which provides a service of digitally documenting customers’ signatures. A total of 20 institutions and companies including insurer AIA Life Korea and the Korea Transportation Safety Authority use this service.  In July 2017, the company launched its digital bank, Kakao Bank, recruiting over 5 million users in under a year.

According to Tim Chae, partner at investment company, 500 startups, ““It was exciting to see startups like Toss be able to beat incumbents — banks and conglomerates — and end up getting them to join in on the effort,” says Chae. He says this might signal a change in Korea’s corporate environment where innovators can successfully address needs, filling this gap left open by market leaders in the industry. 




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