UK and South Korea Collaborate to Build Fintech Bridge
The UK and South Korea have signed a strategic partnership to create a ‘fintech bridge’ for startups and government agencies to establish both countries as the leading nations in the fintech sector
The UK, London in specific, is known as the global fintech and blockchain hub to startups and investors in the fintech and blockchain industries. According to the Outlier Ventures research team, over 115 blockchain companies are based in London, with most of the companies exploiting the blockchain technology outside the realm of the finance industry.
The country’s fintech market has grown at an unprecedented pace over the past decade, generating nearly US$9 billion in revenue last year with nearly 60,000 employees. The UK has also produced notable venture capital-backed companies such as Funding Circle, TransferWise, Blockchain, WorldRemit, and Zopa. Consequently, the government is showing increasing interest in blockchain technology with a recent hearing on its potential for the UK economy.
South Korea, the leader of the fintech scene in Asia, has shown a significant improvement and advancements in the industry of their own, supporting the development and growth of blockchain startups and digital currency projects.
The central bank of Korea for instance, has been long involved in cleaning up the Bitcoin industry from various ponzi schemes, terminating numerous scam altcoins and projects over past year as part of joint investigations with South Korean law enforcement.
Despite the positive rate of growth the Korean fintech industry and market have shown since 2014, South Korea lacks international connections and partnerships with other global leaders to grow their markets.
The Korean Financial Services Commission (FSC) recognized this weakness of the Korean fintech scene and partnered with the UK’s Financial Conduct Authority to share information about financial services innovations and emerging technological trends in the market.
FSC chairman Yim Jong Yong stated that South Korea is a “relative newcomer to fintech,” and the partnership with the UK’s FCA will enable Korean fintech startups and industry to grow and compete with other contenders in the region, such as Hong Kong and Singapore.
The UK’s Chancellor, Philip Hammond, said that,
“The newly established FinTech bridge between the UK and the Republic of Korea is an important step for one of this country’s most exciting industries. The government is determined to help the UK FinTech sector to innovate and grow and to ensure that Britain remains the location of choice for FinTech startups”
The alliance between South Korea and UK is beneficial for fintech and blockchain startups based in London, as it provides an opportunity to relocate to Asia to expand their services and reach a wider range of clientele.
Immediately after the Brexit, many blockchain and fintech startups located in London pondered a move to Berlin and other fintech hubs in Europe. Organizations like Berlin Partner set up a program to ease the move of startups from London to Berlin, luring fintech businesses away from London. Berlin Partner’s Stefan Franzke stated that,
“The most concrete enquiries are coming from London fintechs. They are considering a move to Berlin so as not to lose access to the European single market,”
With UK-based fintech startups planning to relocate to Berlin and France to retain control of the European market as a whole, the deal with South Korea provides startups with a new opportunity to escape the negative post-brexit impact and settle on a new market to expand their reach.
South Korea and its capital city Seoul, have one of the strongest technology industries internationally, with advanced IT infrastructure and resources for companies. However, Jeffrey Jones, an international lawyer specializing in Finance, states that the regulations, fees, and policies for financial companies can be presented as a difficulty for fintech startups, especially to small businesses that operate on low capital.
“It is difficult for fintech companies to market their services in Korea because of the regulations and licensing requirements that tend to protect existing financial services companies… Generally any financial-related services through innovative fintech technologies are blocked because of barriers found in regulations governing foreign exchange controls, fees, approvals and business licenses.”
The strategic alliance between the UK and South Korea is expected to improve these regulatory policies in South Korea, and encourage the South Korean government to offer assistance to emerging fintech startups and solutions in the market.