|Naver CEO Han Seong-seook / Korea Times file|
By Kim Bo-eun
Attention is focusing on IT giant Naver as it takes strides into the financial services sector, setting up a corporate body Thursday that will offer insurance services.
Naver registered NF Insurance Service as an affiliate of its financial services subsidiary. NF stands for Naver Financial, the financial services subsidiary of the tech firm set up last November.
Documents submitted for NF Insurance Service state it has been established for various businesses including insurance sales through channels that include telemarketing, and developing software.
"We are looking to partner with insurers, but specific business plans have not been fixed," a Naver Financial official said Friday.
It appears the Naver insurance unit will function as a platform offering the policies of existing insurers. Naver's move comes as Kakao Pay, a subsidiary of tech firm Kakao, readies to launch a digital non-life insurer.
Naver CEO Han Seong-sook said earlier this year: "Starting with the Naver account, we will enable users to access services including recommendations on credit cards, making investments and signing up for insurance policies through Naver Financial.
"We will evolve into a comprehensive asset platform by launching financial services based on quality data."
Data is a huge competitive advantage for Naver Financial. It has access to huge pools of information accumulated from online shopping transactions, as Naver has grown into Korea's largest e-commerce platform with 30 million users as of the third quarter of 2019.
Naver is likely to partner with Mirae Asset Life Insurance, based on its partnership with the brokerage Mirae Asset Daewoo. The securities firm invested 800 billion won into Naver Financial.
Last month, Naver Financial launched a cash management account, partnering with the Mirae brokerage unit. The account seeks to attract capital and increase the use of Naver Pay, a service that simplifies the online payment process.
But the Naver Financial official said it will not limit its partnership to Mirae Asset's units.
Naver Financial is also set to offer investment products later in the year.
Existing financial firms have begun taking drastic measures to survive in the increasingly competitive environment. Insurance companies are partnering with platform firms to secure additional sales channels that guarantee customer traffic and are developing innovative insurance policies.
Insurers are also moving to acquire general sales agencies as a means of obtaining a stable sales channel, as the salespeople of insurance firms increasingly move to the agencies.
"As the trend for digitalization accelerates, we are seeing various new attempts being made," an official of a life insurer said.
"Existing insurers are also seeking means to survive as new platform players threaten existing insurance companies."
Card firms are also bracing for heightened competition as not only tech companies, but also retailers have joined the easy online payment sector.
KB Kookmin Card said Friday it is preparing to expand its easy payment service into a platform.
Regarding the expanding influence of tech giants, a card firm official said: "This is not a level playing field, as tech companies are subject to less stricter regulations despite them offering similar services.
"This is important considering tech companies' business will continue to grow in the future."
Financial authorities have said they are working on revising regulations to address the issue. The government has subjected tech companies, including startups, to fewer regulations in an attempt to foster the fintech industry.
Tech companies' stock prices have continued to rise, reflecting growing expectations over their financial businesses.
Naver's share price rose to a record high of 299,000 won at Friday's market close. Kakao's share price spiked at 355,500 won.