Toss is pushing to enter the online investment-linked financial business (P2P lending business) to directly handle unsecured personal loans for medium- and low-credit borrowers. Its plan is to supply medium-interest rate loans through a peer-to-peer (P2P) financial model.
According to the financial industry on the 30th, Viva Republica, the operator of Toss, is known to be preparing a registration application to enter the online investment-linked financial business. It is currently discussing business structure and regulatory issues with financial authorities and the online investment-linked finance industry.
It has not been decided whether Viva Republica will register directly as an online investment-linked financial business operator or establish a separate subsidiary. Viva Republica is a holding company that owns financial subsidiaries such as Toss Bank, Toss Securities, and Toss Insurance. Because it directly operates various businesses such as payments, financial product brokerage, and shopping, restrictions on side businesses under the Online Investment-Linked Financial Business and Protection of Users Act (Online Investment-Linked Financial Business Act) are cited as an obstacle to direct registration. Accordingly, it is also considering a plan to establish a subsidiary dedicated to the online investment-linked financial business.
To receive approval for the online investment-linked financial business license, registration with the Financial Services Commission (FSC) is required. Prior to submitting the registration application, a preliminary review is conducted by the Online Investment-Linked Finance Association, and documents are subsequently submitted to the FSC. After that, the Financial Supervisory Service (FSS) takes charge of the examination. Toss has not yet submitted application documents to the association or the FSC. It is reported that after finalizing its business structure between direct registration and establishing a subsidiary, it will enter the formal registration process.
The online investment-linked financial business connects investors' funds with borrowers who need loans through a platform. Online investment-linked financial companies assess borrower creditworthiness to create loan products, recruit investors, and manage the repayment of principal and interest.
The reason Toss is entering the online investment-linked financial business is to directly handle unsecured personal loans. Although its subsidiary Toss Bank supplies loans for medium- and low-credit borrowers, Toss plans to provide medium-interest rate loans to borrowers who find it difficult to pass Toss Bank's screening threshold. The intention is to expand inclusive finance by reducing cases where borrowers who have difficulty borrowing from the banking sector are pushed to high-interest loans such as money lending businesses.
On the other hand, voices of concern regarding conflicts of interest are emerging from some quarters. Toss brokered online investment-linked unsecured personal loans and possesses data such as loan conditions, customer inflow, and product performance of vendor companies on its platform. An official from the online investment-linked finance industry pointed out, “There are concerns about whether a giant company is coming in to take the fruits after we have pioneered the market while enduring losses for several years,” adding, “It is unfair competition for a platform possessing loan vendor product and customer data to conduct business based on that data.”
The online investment-linked finance industry is requesting a decision from financial authorities on whether Toss's direct entry constitutes a prohibition on side businesses under the Online Investment-Linked Financial Business Act, while also expressing concerns over conflicts of interest.
Conversely, expectations are also rising that Toss's entry could boost the credibility and awareness of the online investment-linked financial market. It is evaluated that if Toss, equipped with a large user base and capital strength, participates, the online investment-linked financial sector can expand its scope into an unsecured personal loan market for medium- and low-credit borrowers.
An official from Toss responded, “Toss is reviewing various measures to expand inclusive finance,” adding, “It is difficult to confirm matters related to the license.”
