Recently, I heard an interesting anecdote from the head of a research institute. They decided not to allow family members to accompany foreign researchers invited to a seminar in Korea. This decision was made due to the increasing interest in Korea, particularly the rising popularity of K-pop and K-food, which has led many attendees to want to visit Korea with their families.
Organizers likely had to consider the rising costs of accommodation. Nevertheless, many participants still brought their families, indicating a strong demand to experience Korea firsthand.
The popularity of Korean culture is palpable both online and offline. Foreign visitors come to Korea to see BTS and seek out Korean fried chicken and ramen. Photos taken at Gwangalli Beach in Busan flood Instagram, and shopping at Olive Young and Daiso is a common sight. The term 'Hallyu' no longer needs explanation, as Korean cultural content is consumed naturally by foreigners.
However, this trend is not as evident in the financial sector. While there are Korean financial firms operating abroad, it feels awkward to label them as K-finance. Simply having a presence overseas does not equate to possessing global financial competitiveness.
In this context, the recent international activities of K-fintech companies are encouraging.
Affinitt, which operates a financial platform targeting India's middle class, is expanding its services using an AI-based alternative credit scoring system. The Indian middle class is estimated to exceed 1 billion, and Affinitt has recorded over 120 million downloads of its service. This is significant as it directly targets local financial consumers with Korean financial technology in a vast market like India.
Habit Factory, which is involved in the mortgage business in the U.S., is another notable fintech company. Within four years of establishing its U.S. subsidiary, it achieved a cumulative loan amount of 256 billion won. Last year, it successfully raised 35 billion won in a Series D investment to expand its overseas operations. WireBarley, a remittance and payment company, operates in eight countries, including the U.S., Australia, Singapore, and Hong Kong, establishing a stable revenue base.
What these companies have in common is that they have sought breakthroughs abroad without the label of 'Korean financial company.' They have integrated their technology and financial services into local markets rather than merely replicating services that worked in Korea. They aim to identify and compete with local financial market issues.
This may be the path that K-finance needs to take. Instead of simply promoting themselves as 'Korean banks,' they should create products that leverage the technology, experience, and systems of Korean finance to compete in the global market.
South Korea has rapidly developed mobile finance, easy payment, and non-face-to-face financial services based on world-class digital infrastructure. There is also considerable experience accumulated in corporate finance and policy finance, supporting a manufacturing-centered industrial structure and export companies. Additionally, there is valuable experience in asset management, pensions, and digital finance, which will be critical issues for countries worldwide as they face aging populations.
The five major financial holding companies in South Korea recorded over 13 trillion won in net profit in the first half of this year, setting a record high and expanding their size. They are broadening their overseas networks, positioning global business expansion as a future growth driver. However, compared to the profits earned in the domestic market, their competitiveness in overseas markets is still in its infancy.
In this sense, now is the time for K-finance to reflect on its future. The domestic financial market faces several constraints, including population decline, low growth, household debt, and a real estate-centered financial structure. For financial companies, remaining solely in the domestic market makes sustained growth increasingly difficult. Expanding overseas is no longer a choice but a matter of survival.
* This article has been translated by AI.
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