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Fintech in South Korea: An intro to the country’s fintech scene

June 17, 2024

Julie Choi

Julie Choi is a Partner Director at Tenity, where she empowers entrepreneurs to accelerate their growth journeys. With a focus on strategic planning, business development, and building robust industry partnerships, Julie leverages her experience working with government agencies, corporates, and startup communities in Korea .

Fintech in South Korea: An intro to the country’s fintech scene

The fintech scene in South Korea is growing fast. While it might not be the first place you’d think of when it comes to financial services in APAC, the country has serious ambitions and opportunities for fintech companies. 

In this article, I walk you through what the fintech scene is like in Korea and what you need to know if you’re considering opening an office there. 

I’m the partner director responsible for Korea at Tenity’s Singapore hub. Based on my experience in the region, I share key information you need to know if you’re looking to invest in or partner with a fintech company in South Korea.

I cover:

Interested in working or partnering with fintech brands in South Korea? Get in touch to find out more about how we can help.

Key statistics about fintech in South Korea

As an introduction, let’s start with some key numbers about the local fintech scene. 

According to Statista, in 2022, the number of fintech businesses in South Korea was 592, which amounted to a fourfold increase over 9 years:

  • Fintech enablers accounted for 42% of the market
  • The payment and settlement sector had a share of 17%, followed by:
    • Market provisioning and asset trading (13.5%)
    • Asset management (9.1%)
    • Digital assets (5.9%)
    • Insurtech (3.7%) 
    • Digital banks (0.5%)

Meanwhile, venture investments into Korean startups have grown steadily until 2023, reaching 5.39 trillion in 2023, according to Statista. South Korea also ranks fifth in the World Bank’s global “Ease of Doing Business” rankings. 

What’s particularly impressive about South Korea’s fintech industry is its level of digital penetration:

  • 93% of the country are regular internet users (according to the Ministry of Science and ICT)
  • 67% of digitally active Koreans have adopted digital financial services in their day-to-day lives (according to researchers at Seoul National University)
  • The daily average value of mobile payment transactions made in South Korea amount to 875.5 billion won, up from 761 billion won in the previous year (Statista)

This level of digital penetration provides serious opportunities for fintechs. As an example, the South Korean superapp with a fintech arm KakaoTalk was used by 96.1% of South Korean internet users at the start of 2024 (according to DataReportal).

What’s the history of fintech in South Korea?

In just 60 years, South Korea has transitioned from a mostly agrarian economy to become a high-tech hub. Today, it’s the world’s 14th largest economy and the 4th largest economy in Asia. 

This growth was led by South Korea’s “chaebols”, family-run conglomerates such as Hyundai, Samsung, and LG. Over this period, the economy also received substantial incentives from the state, as well as large sums of international investment. As a result, for 47 years starting in 1963, the economy averaged 7% real growth annually, according to a paper by the East-West Center

Today, South Korea has a diverse economy, whose financial sector is largely dominated by local institutions. But it wasn’t all smooth sailing. The 1997 Asian financial crisis triggered major changes in the country’s financial services sector, including the establishment of the Financial Services Commission (FSC) in 1998. 

This institution now plays an important role in South Korea’s growing fintech sector. From 2014, it started to encourage banks to innovate and, four years later in 2018, seven local banks had their own fintech innovation labs, according to Intralink. These were Shinhan Financial Group, KB Financial Group, KEB Hana Bank, NH NongHyup Bank, Woori Bank, Industrial Bank of Korea, and Hanwha Life Insurance.

Over the last decade, South Korea’s fintech sector has taken off. In 2017, the government established the Ministry of SMEs and Startups to systematically oversee startup support schemes. And in the same year, Korea’s two largest fintechs—Kakao Bank and KBank—were founded. 

Then, in 2018, both the Fintech Center Korea and the Seoul Fintech Lab were established. Together, these provide two of the most important institutions in the local fintech landscape.

Since then, the South Korean government has been transforming the nation’s regulatory landscape one initiative at a time. For instance, in 2019 it passed the Special Act on Support for Financial Innovation, which introduced a financial regulatory sandbox program. Later that year, it also introduced new fintech investment guidelines and an open banking system. 

In fact, throughout the last two decades, the history of fintech has been one of continued state support—and this looks set to continue. Going forward, the Korean government has identified fintech as one of 24 key areas to promote growth in the financial sector. Plus, the government has recently doubled its Fintech Innovation Fund to 1 trillion won ($781 million), to further support the industry.

What makes South Korea a good place for fintech?

Whether you’re an investor, a financial institution looking to partner with Korean fintechs, or a fintech startup looking for a new market, you’ll find Korea to be a unique fintech ecosystem. 

Here are 3 things that sets it apart. 

1. South Korea has a population that’s seriously digitally engaged, making it easier for fintechs that want to test new features

South Korea has a population of over 50 million, and it’s thought that 93% of this population use the internet daily. Plus, 97.8% of the population own a smartphone, the highest rate of any country on the planet. 

This means that South Koreans are highly digitally engaged and digitally literate—and they’re open to trying new technologies. 

You only need to look at the usage of major native fintechs such as Kakao and Toss to see how willing Koreans are to adopt new solutions. Over 95% of Korean internet users are active on Kakao, while Toss has over 20 million regular users

In South Korea, unlike in other regions, fintechs aren’t just serving a niche market. Instead, they have access to the vast majority of the population. 

What makes many of these apps so successful is that they’re superapps. They integrate many solutions, such as messengers or taxi services with payment services and banking. In fact, 3 or 4 of the 22 Korean unicorns are superapps. This tells you something crucial about the South Korean market and the business models that thrive here: Koreans don’t just want standalone finance apps, but apps that do everything. 

So, while there’s a lot of competition when it comes to payment companies already, the Korean market is a great opportunity too – particularly if you’re willing to integrate with other companies. For fintechs, this means Korea is an ideal place to test new digital and technologically advanced features. 

2. South Korea’s government is active in supporting the local fintech scene, which will make it easier to scale as a fintech

As you’ve seen from the brief history of Korean fintech above, the government plays a key role in the ecosystem. It’s been active in setting up innovation labs, releasing funding, and improving the regulatory environment. 

Overall, this has been really fruitful—and not just for local fintechs. Rather, international brands seeking to enter the Korean market have benefited too. 

Historically, Korea has been known as a market with quite strict financial regulations, which came about as a result of the financial crisis. This has been just one of the challenges that have made it difficult to enter this market—alongside the strong role of financial institutions and the language.

Despite this, the government has been committed to providing funding and opportunities to support the industry. 

For domestic startups, a $2.8 billion fund has been established. Meanwhile, the likes of the Seoul Fintech Lab and the Fintech Center Korea have worked to ensure that startups have the right support. Large investments are now coming from entities like corporates, banks and pension funds, which will continue to positively fuel the startup ecosystem. 

For international startups, the government is providing help too. For instance, it launched the Overall Assistance for Startup Immigration System (OASIS) which actively supports fintechs to come to Korea. It means that it’s easier for startups to access working visas and find offices to rent affordably. 

Overall, this means that, as an international fintech, you’ll get the support you need to scale if you decide to open an office in Korea. 

3. South Korea has a vibrant startup community, which can make it easier for fintechs to access talent and startup support

Alongside government support and open-minded consumers, South Korea also benefits from its large community of startups. 

As an example, the Seoul Fintech Lab is currently home to 82 startups. And it recently opened its second lab, focusing on early-stage and pre-seed fintechs. 

There are many other institutions that foster fintech growth too. As we’ve seen, at least 7 major banks have their own financial technology programmes. Meanwhile, the Korean Institute of Startup and Entrepreneurship Development (KISED) provides education in everything that setting up a startup involves. 

But it’s not just because of its institutions that South Korea offers an exciting startup ecosystem. Rather, fintech services is becoming a major part of the economy. For example, in 2021, the number of new jobs created by startups surpassed the number of jobs created by the four largest conglomerates combined, according to the World Economic Forum.

It’s a quickly growing industry. And as a fintech, this supporting environment means you won’t be left to fend for yourself if, for example, the language is a challenge. 

What’s the future of fintech in South Korea?

South Korea’s fintech scene is relatively new, having only emerged in the last decade. Yet we’re really excited about its future, and we expect new international startups to join our local fintech talent. 

The second Seoul Fintech Lab is a great addition to this scene, for instance, helping to nurture startups from the earliest stage. Plus, simply, the Lab’s growth allows it to support more fintechs overall. 

In coming years, we’ll also be able to see the continued impact of recent regulation to support startups in other ways. With additional funding being set aside for fintech and boundaries to entering the market reduced, it’s an exciting time for the industry. 

What are some well-known fintechs in South Korea? 

Some well-known fintechs include:

  • Kakao. A South Korean superapp combining messenger functionality, taxi and e-bike services, and more, alongside digital payment and banking. It’s worth 20 trillion won ($14 billion). 
  • KBank. The first internet-only bank in Korea. It’s expected to be valued at around 5 trillion won ($3.73 billion) at this year’s IPO. 
  • PayCo. A digital wallet and payment app. It’s used by over 12 million people and accepted by over 90% of Korean merchants.
  • Toss. Owned by Viva Republica, Toss is a superapp and digital wallet. It’s used by over 20 million people and is valued at $7.4 billion.
  • Market Kurly. A grocery delivery app that purchased the payment gateway, Paybot. It’s now planning an IPO of $2.3 billion. 

What is Tenity’s role in this ecosystem?

Tenity was born as an open innovation program in 2015, as part of SIX, the Swiss Stock Exchange. Since then, we’ve opened hubs in Spain, the Nordics and Baltics, Turkey, London and in Singapore. 

There are 3 main roles we play, including in South Korea. 

1. We connect financial institutions and startups

At Tenity, we help financial corporates learn about and collaborate with fintech startups. At the same time, we help startups benefit from funding from, exposure to, and partnerships with these incumbents.

In practice, this usually takes two forms:

  • We run custom accelerator programmes for corporates. This involves scouting and training startups to solve corporates’ specific innovation challenges. For instance, we’ve worked with KB Financial Group, Korea’s leading financial services provider, to create an accelerator programme in Singapore.

  • We run our own incubators. While we haven’t launched our own programmes in South Korea yet, local fintechs are invited to our incubators in Singapore. 

Through both types of programmes, we play an active role nurturing South Korea’s fintech talent. 

2. We help local startups reach a global market, international fintech expertise, and investment

We work with Korean government agencies, public organizations, and corporates as program partners, who give us a mandate to support local startups to scale abroad. Typically, we help Korean startups to enter the Singapore market, which they can then use as a launchpad to scale to the rest of the region. 

One way we did this was by partnering with the Seoul Fintech Lab. Together, we created a six-week accelerator programme in Singapore specifically for Korean startups. 

Everywhere we work at Tenity, we’re entirely focused on fintech. Founded in Switzerland’s financial centres, we work across Europe and Asia with some of the world’s biggest financial institutions, such as UBS, Franklin Templeton, and Allianz. 

This deep experience means that we have highly specialist expertise that we can share with startups, to enable them to grow. 

Plus, our accelerators always include a grant for the startups involved, while we also connect them with global investors. Through our programmes, startups are able to pitch their products, present their ideas, and win funding. 

3. We solve corporates’ innovation challenges

We can help you as a corporate, whether you’re ready to set up your own accelerator programme, invest in a fintech startup, or something else. Even if you’re not ready to collaborate with startups, we can help you design an innovation strategy, or learn about the trends and opportunities in the financial industry.

For instance, we work with KB Financial Group (KBFG). We’re helping their startups scale into Singapore, through seminars, meet-ups with potential partners and knowledge sessions. Plus, we perform fintech market research for the corporate’s portfolio. This year, we’ll be focusing on generative AI and how the corporate can leverage this technology. 

Wherever you’re at in your innovation journey, we can help. We provide a completely custom service based on the specific challenges you’re facing. 

Fintech in Korea: An emerging ecosystem in Asia

If you’re looking for a new market with reliable government support, a user base that is digital savvy and an exciting fintech community, South Korea is a great place to grow your fintech. 

At Tenity, we’re proud to be an active player in the country’s fintech economy. Reach out to us to find out more about what we do.