The spread of the Internet, the introduction of mobile devices, and the development of information technologies such as artificial intelligence, big data, and internet of things have had a great impact on the financial industry. Starting from long-distance non-face-to-face transfer of funds, asset management using artificial intelligence, credit analysis using big data, etc., the financial industry has changed substantially for the past few years and finally, fintech, a combined word of finance and technology, become a common terminology.
The Korean government recognizes fintech as a major sector of the 4th industrial revolution, and it is currently promoting the fintech industry as a new growth engine for future economic development. In addition, it is implementing several practical policies such as suggesting fintech promotion activation plans and establishing a new organization called Fintech Center Korea. Meanwhile, as fintech industry expands, several problems such as protection of personal information and securing system stability begin to show up, and the government's regulation and supervision in this area has entered a new phase. The 「Electronic Financial Transactions Act」 was created, and the importance of personal information began to be more emphasized.
This study attempts to analyze the recent development of fintech industries in five major countries of Indonesia, Malaysia, Thailand, Vietnam, and India in Southeast Asia and South Asia and to give policy recommendations for the government of Korea to improve the fintech industry of these countries. For this purpose, newly developed fintech products and business models as well as the financial industry and ICT infrastructure of these countries were examined. Government promotion policies and regulatory issued are given as well.
It shows several important observations as follows. First, several electronic payment services applying plastic cards or online software have been used as retail payment means for these years. Second, account transfer services through online banking and mobile banking services using the Internet have been provided in most countries. Third, some of the loan-related services in online banking are provided, and securities transactions using the Internet are found to be actively conducted in all countries. Fifth, while fintech companies emerged from the early 2000s, their development speed had been very slow for years and they became active in the late 2010s. Sixth, fintech companies in these countries actively are using financial resource from not only their own countries but also foreign investors to secure investment. Seventh, while Vietnam was the latest to introduce fintech services among these five countries, its development speed was very fast.
Meanwhile, applying our own definition of fintech indexes to these countries, it is shown that as of 2019, Malaysia and Thailand ranked the top among the five countries with almost similar scores. Vietnam, Indonesia, and India followed in that order. Looking at the changes in each country's index in 2010, 2015 and 2019, Malaysia, Thailand, and Vietnam showed a significant increase during this period, while India and Indonesia did not
It is highly recommended that Korean fintech companies closely work with local partners if they want to enter the markets of these countries. This is because fintech services are closely related to local finance and payment customs, so it is not easy for Korean companies to penetrate the local market independently. It should be considered that these countries do not have sufficient ICT infrastructure nationwide and they did not have capable human resource. It is advisable that they should take care of differences in market structure, payment infrastructure, customs and government regulations, etc. of each country to select the country and the product to launch there.
The Korean government and public institutions may implement various supporting policies for Korean fintech companies. For example, programs to promote mutual understanding between Korean fintech companies and local companies can be carried out. Active programs to enhance the cooperation among financial regulatory agencies are also recommended. More specifically, it will be possible to provide on-site support through roadshows, inter-agency workshops, and invitational training of local regulatory agency employees. Also, the government's ODA project for these countries can also be promoted considering that all of these five countries are low-income countries trying to improve financial inclusion.
Meanwhile, it is very important to reorganize the relevant laws and regulations on Fintech of the New Southern countries or to conduct research projects on them. For example, it may be necessary to review various related laws such as the 「Information Protection Act」 and 「Consumer Protection Act」 necessary for providing fintech services, and the coordination of these regulations can be carried out through the ODA project.
Finally, an institutional arrangement in charge of these policy action should be established. Currently, their assignments were segmented into several institutions on ICT promoting institutions, export promoting ones, SME developing ones as well as financial service supervising and as a result, it is very difficult to coordinate.