The word itself was rare until May 2014.
Yonhap Infomax first reported the article titled “What is Fin-Tech?” on 9th May 2014 as the First article. Occasionally the Korea Economic Daily reported the article regarding entrepreneurship with the British Startup ecosystem case.
The word – fin-tech – itself was new to everyone compared with nowadays.
Viva Republica – a fin-tech startup well known for its service, Toss, and one of the South Korean unicorn startups – was founded around a year ago.
One month later, when the South Korean press published the first fin-tech article, the startup secured its Seed-stage funding from Altos Ventures.
No one knew that the startup would be an innovative disruptor in the financial market.
How could the disruptors become so powerful?
1. Mobile was eating the legacy banking service.
In December 2016, Benedict Evans – a partner at Andreessen Horowitz, told the world that “Mobile is eating the world” at a16z inaugural summit event. For example, the smartphone device penetration rate in South Korea was 85% at the end of 2016.
Around 55 thousand staff worked in the four leading significant banks in South Korea. However, as most financial industry is deeply related to public sector regulations, service improvement is biased toward the PC environment, not mobile.
The shift from PC-based to mobile-based banking accelerated and became mainstream in 2017.
2. Customers faced the innovation driven by foreign fin-tech players.
The case of Transferwise was excellent for ordinary citizens regarding its convenience. However, the media representing the legacy banks’ position pointed out the illegality of the service by Transferwise.
However, people realized that bank service should be convenient, and inconvenience was due to the regulation.
The idea of an internet-only bank establishment was raised in 2001 but actualized discussion in 2015.
Since the government sector disarms innovation regulations, fintech startups or big IT companies have driven fin-tech applications or services.
We have many success stories from those players, but no one talks about the legacy player. So let’s begin with why.
Lessons Learned from the legacy players.
1. Lack of User Experience perspective during the beginning era.
The legacy banks operate tens of applications under their unbundling strategy.
As its IT department drives the application development, performance and speed are the apApplication’sriorities.
Each application should have differentiated unbundlinApplicationooks similar if you look at the application icons.
The parallel applicatioApplication, the users, that YOU MUST STUDY our applicatioApplicationof unbundling, the leading fintech startups or tech players have selected One ApplicatioApplicationcrucial initiative.
The players integrated its features within Toss, Naver, or Kakaotalk applicatApplicationKakaopay, and Kakaobank has unbundling applications but provides different user experiences.
2. Farmer vs. Hunter
Every human has its character, and every company has its own culture.
Under a stable financial environment, the talent and operation focused on maximizing utilization, zero errors, and steady like farmers.
Because it was the best way to keep their business great, their workplace was a life-long workplace.
Compared with legacy banks, Fin-tech startups are hungry.
They are hunters. Their priority is to move fast, fix quickly, and renew fast if they cannot hunt the customers.
If the business is booming, many benefits will be fruits. Otherwise, they were hungry.
Furthermore, the startup staff tried to show their best and shift to other jobs or their startup.
Under the fast-changing environment, the output from hunters could attract more customers and became the primary shift.
3. Carnivalization vs. Market Creation
One of the reasons why the legacy players are losing is that they do not want to lose their legacy market.
When Viva Republica launched its loan interest comparison service in August 2019, no primary financial institutes did not participate.
Only four secondary financial institutes operating high loan programs participated in the service. The primary financial institutes felt that service participation might break its asymmetry in information.
What if they started first by aligning with their competitors?
Still, legacy financial institutions drive a majority of the finance initiatives. However, the new players disrupt one by one with maybe Jack’s feelings in the movie Titanic.
“When you got nothing, you got nothing to lose.”