The online investment-linked financial industry (often referred to as the ONTO industry, formerly P2P) continues to struggle. The loan balance in the ONTO industry has fallen by more than 20% over the past two years, and businesses closing due to poor operating performance are becoming more frequent.
According to the central record management agency for the ONTO industry on the 10th, the total loan balance in the ONTO sector stood at 1.106 trillion won at the end of December last year. This represents a 22% decrease compared to the peak loan balance of 1.4152 trillion won recorded in May 2022.
The prolonged high interest rates and the resulting decline in the real estate market have caused a long-term recession in the ONTO industry. According to the Financial Services Commission, real estate loans accounted for 66.1% of the total loans in the ONTO sector as of the end of June last year. Furthermore, the liquidity of selected companies has decreased following the unresolved situation involving Timon and WEMAKEPRICE (often referred to as Timref), leading to a 70 billion won unresolved issue at the ONTO company 'Cross Finance,' which has further impacted investor sentiment.
As a result, closures of ONTO companies are on the rise. The number of ONTO companies, which stood at 53 at the end of 2023, dropped to 50 as of June last year, and the number of registered companies is expected to decline further. The Financial Services Commission notified the ONTO company 'Modu's Fintech' on the 3rd of this month regarding the cancellation of its registration. The Financial Services Commission noted that the company violated its 'obligation to maintain personnel and computer facilities' due to lack of operating results for over six months, firing compliance officers and IT personnel, and halting its platform.
In addition, the Financial Services Commission has reportedly notified one or two other companies regarding the cancellation of their registrations. If these companies do not submit a separate opinion by next month, closure will be virtually inevitable.
There is growing interest in whether 'institutional investment,' which has been a long-anticipated goal for the ONTO industry, will revitalize the market. The Financial Services Commission designated personal credit loan-linked investments by savings banks in the ONTO industry as an innovative financial service last July. In this model, savings banks lend money to individual borrowers (those borrowing money) recruited and assessed by ONTO companies. The first product is expected to be launched as early as next month. A certain savings bank is reportedly considering investing hundreds of millions of won into two or three ONTO companies.
Within the Financial Services Commission, there are suggestions to explore ways to encourage corporate lending through institutional investments. A team that traveled to the United Kingdom in late November last year to seek development directions for the ONTO industry stated in their report that "it is inappropriate for ONTO companies, which should operate specialized loan products that existing financial sectors find difficult to handle based on fintech technology, to pursue stable revenues such as home mortgage loans." They emphasized, "It is necessary to activate corporate lending through institutional investments from policy financial institutions, similar to the UK." A Financial Services Commission official remarked, "This is just one of several ideas and is not yet in the formal review stage."