Fintech

The use of financial services for non-face-to-face transactions is increasing and simple payment systems for e-commerce are diversifying. With the rise of cryptocurrencies, interest in blockchain-based solutions has also increased. IT giants such as Naver and Kakao have also emerged as major market players by including financial services in their platforms. Major online and offline banks, as well as securities firms, insurers and technology companies, are partnering with fintech leaders to stay relevant in a rapidly changing market.

Opportunity areas for UK companies

British companies looking to enter the market should find a warm reception as the country is well recognised within Korea as a fintech powerhouse. Indeed, in 2016 Korea signed a FinTech Bridge agreement with the UK which aims to increase coordination on regulation and help financial technology firms and investors gain access to each other’s markets by establishing links between the respective governments, regulators and private sector firms. The bridge reduces barriers to entry into Korea and links fintech businesses in both nations with opportunities for trade and investment.

Korea's fintech capability gap compared with the UK and the country's close cooperation through the FinTech Bridge creates opportunities for British companies in the Korean market.

The key areas of growth and potential for British businesses include digital payments and blockchain technologies. There are also opportunities in artificial intelligence (AI) applications for finance, robo-advisors and insurtech, amongst others.

While deregulation is occurring, British companies looking to enter the market need to understand the local regulations around their solution or technology and, through due diligence, ensure they are working with the right customers and partners for the best chance of success.

Government and fintech

Fintech has been identified as an important growth industry by the Korean authorities and steps are being taken to remove or revise regulations to ensure Korea offers appropriate opportunities for new fintech solutions.

Regulations that have acted as an obstacle to the development of the fintech industry are being lifted and policy support for fintech R&D such as AI, big data and blockchain is expanding.

The implementation of policies, such as the Regulatory Sandbox Program, are encouraging companies to develop and deploy new solutions and gain market validation by providing a roll-out environment free from certain regulations. Open Banking and MyData, allowing financial cloud services, easing entry barriers to the financial industry, and promoting additional approval of internet-only banks are some of the other steps taken to remove or revise regulations to ensure Korea offers appropriate opportunities for new solutions.

Market entry checklist

UK businesses looking at the Korean market should consider both business-related and cultural factors before setting out. These might include:

• Do we have a strong differentiator that sets us apart from our competitors in the market?
• Do we have a strong track record in other major markets?
• Are we willing to localise the product for the market and/or for local regulations?
• Are we ready to provide a Proof of Concept (PoC) at little or no cost to the customer?
• How do we provide after-sales support?
• Do we understand the local regulations, particularly in relation to data? Do we need to adjust our business model to adapt?

UK businesses can approach the Korean market through direct sales from the UK by appointing a local channel partner or by setting up an office in Korea. Each has its own benefits and drawbacks, and these should be given strong consideration before entering the market. With the right strategy and local support, Korea offers great opportunities for UK fintech companies looking to expand overseas.