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[Weekender] ‘Fintech in payment industry is all about convenience’

By Korea Herald
Published : Jan. 2, 2015 - 21:45
Archaic systems, inconvenient processes and a great deal of patience. These were the conditions that brought the founder of fintech startup Viva Republica to the exciting and growing arena of financial technology.

Viva Republica is one of only a handful of fintech startups in South Korea, where strict regulations and excessive security measures remain major hurdles for market development.

Lee Seung-gun, a dentist-turned-CEO, founded the company in 2011 to free users from complex security and verification processes.

In December, Viva Republica introduced a closed beta version of its mobile money transfer app Toss, and is waiting to launch it this month in partnership with four major banks, including NongHyup.

Viva Republica CEO and founder Lee Seung-gun (center) poses with the company’s mobile money transfer app Toss in its office in Seoul. (Park Hyun-koo/The Korea Herald)


“The basic concept of fintech is to change traditional financial services through technology. And the key technology in the payment industry is making the process more convenient,” Lee said.

Toss simply requires users to type in a recipient’s phone or account number and a five-digit passcode to send money. The recipient, who is not required to download the app, will get a URL link through which the money can be deposited into an account.

The process is almost effortless and takes much less time than traditional online money transfer services here, which require endless downloads of security programs, verification processes and an authentication certificate download.

However, that does not mean the company prioritizes convenience over security.

Lee said the firm injected 90 percent of its investment money from U.S. investment firm Altos Ventures into security programs and technology, which cost billions of won.

“There have been so many barriers for startups to enter the finance market, from a required starting capital of 1 billion won ($918,000) to a monthslong government review process, to excessive vaccine and security programs,” the CEO said.

“For innovation, there should be an environment where companies can freely do new experiments without worrying about the result.”

The number of users and transaction volume grew 70 percent each week, attracting 5,000 users and 100 million won in transaction volume during a beta service period in April.

Local banks, however, seem to have yet to catch on, or are skeptical about the benefits of fintech.

Overseas, entrepreneurs and financial institutions have been working together to ensure that innovations suit the specific needs of the financial industry and its customers.

“Fintech companies are no threat to local banks. It’s been proven that more and more innovation and new product developments have been done by small, independent firms. And ultimately, they’re fostering new innovations for the financial industry,” he said.

Amid such conditions, the mobile payment platform is still regarded as a fresh growth engine and source of investment for forward-looking firms, such as Daum Kakao Corp., the operator of the country’s most popular messenger app, KakaoTalk.

Daum Kakao’s Bank Wallet Kakao is currently regarded as Viva Republica’s largest rival, as its messenger app boasts 37 million active users as well as considerable marketing power.

PayPal, Amazon Payments and Alibaba’s Alipay are expected to launch this year.

“We’re not threatened at all by other similar services. When you look at these existing applications in Korea, they’re using the same system and model. It’s been proven that no matter how big their big marketing power or the number of users are, it will not succeed if it is not user-friendly. The key to this game is whether it can change the user experience.”

By Suk Gee-hyun (monicasuk@heraldcorp.com)

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