[Infostock Daily=Choi-Yang-ho, advisor to the Hyundai Research Institute] Mirae Asset and Naver have started no-collateral and no-cosign loans. Economic newspapers and some media analyzed that platform company Naver has entered the loan market, which generates huge profits without a bank license. Some reacted to the news negatively by saing that Naver showed its evil intention of taking over the financial market.
Major banks reacted to the news as it was inevitable since the loan market is profitable. However, the reaction of the second financial sector is more intense and negative, They perceived that Naver's loan service as a threat.
Why is the reaction of secondary financial institutions, such as savings banks, so fierce when Mirae Asset and Naver have entered the unsecured credit loan market? Looking at the article, I heave learned that the loan services are targeted to Naver's online store small business owners. It provides 'unsecured'credit loans to small business owners who conduct business online without a store.
In my opinion, interest rates for the new loan service are also amazing. Even though there is no collateral, they are willing to lend up to 50 million won and interest rates are at least 3.2%. I got curious and reached out to a bank official I know. I wanted to know whether there are any loan products that lend to small business owners who have no collateral, no co-sign, and little income.
The answer was no. I called a few more places, but their answers were same. When I inquired about reason for the loan decline, they said, "Proving a loan to customers with no or bad credit is a very difficult market for a normal loan company to enter because of uncertainty." In other words, they are classified as the borrower who can only take out the loan from the private, predatory lenders who charge the very high interest rate.
After learning about the reality and more details about the news, the negative headlines from economic media seemed leading and incorrect.
I had a chance to talk to a Financial Services Commission official, so I asked questions about the news. According to the official, lending loans to small business owners without collateral or cosign would end up incurring losses. Although Mirae Asset and Naver were fully aware of the fact, they still wanted to enter the market. It has been confirmed that the Financial Services Commission has given a guide and permission to come up with a sophisticated system.
This is a very good case in which the economic department in the government paved the way and private companies created models nicely through technology.
There were also repercussions in the financial industry. As Naver started online business credit loan services using smart store sales data, commercial banks are also focusing their company-wide capabilities on improving the existing credit rating system, which is highly dependent on financial transaction data.
At the end of the day, a financial official's comments suddenly come to mind.
"Loan services to the small business owners with no income or creadit should be conducted by the state(central government). How can financial institutions provide loans to high-risk customers?"
