An interesting article this morning in The Korea Joongang Ilbo, headlined "Mobile pay market is on the move." But is it really? As noted by the article, "With more customers using mobile finance services, a battle has begun in the banking and telecommunications world. KakaoTalk, the nation’s largest messenger app, plans to begin handling mobile transactions and payments as early as next month. China’s largest online payment company, Alipay, also is working to become an electronic prepayment issuer under Korean law. Financial companies are scrambling to secure customers by partnering with KakaoTalk, while at the same time continuing to develop their own electronic purses." The article was accompanied by a graphic, included with this post (click to see a full size version) that shows the recent increase in number of registered mobile banking users, which now surpasses 40 million. I recommend reading of the article for a quick update on current trends.
However, there is another side to this story, which is the larger picture of how financial transactions are currently being handled on South Korean web sites. Unfortunately, there are still many institutions that cling to old, outdated and risky Microsoft software solutions, even after the government, from the President on down, have urged them to modernize and improve security for financial transactions.
To illustrate this point, I will use my personal example. After being a happy expatriate resident of Korea and user of Skype and its "Skype out" service for many years, I recently stopped using "Skype out" a paid service that allows you to call regular phones anywhere in the world. The reason? Sometime after Microsoft purchased Skype, a Korean company took over responsibility for all Skype services originating in South Korea and I was asked (yes, in the Spring of 2014 and after President Park Geun-hye's meeting with business leaders on the topic of deregulation) to download and install Microsoft's Active-X control, as shown in the screen capture accompanying this post (click to see a full-size version). This pop-up screen appeared even though I was using the Chrome browser, not Internet Explorer. That was the last straw. Microsoft itself warned the public about the inherent security risks in Active-X years ago. Korean companies have been urged by their president to stop using Active-X and institute modern online and mobile security measures.
5G or next generation mobile broadband service is a hot topic in industry and government circles these days, despite the large technical and policy issues it presents. In January of this year, as noted in an earlier post, the Korean government declared its intention to be a world leader in 5G mobile communication. In June of this year, the Korean government signed a landmark agreement with the European Union to cooperate on the development and implementation of 5G and issued a joint declaration to that effect. As shown in the accompanying graphic (click to see a full size version), the EU's 5G Infrastructure Association has adopted the theme "public private partnership," which also happens to be a hallmark of South Korea's ICT-led socioeconomic development beginning around 1980.
In describing the new EU-Korea agreement, Neelie Kroes, Vice-President of the European Commission for the Digital Agenda commented that "5G will become the new lifeblood of the digital economy and digital society once it is established. Both Europe and South Korea recognise this. This is the first time ever that public authorities have joined together in this way, with the support of private industry, to push forward the process of standardisation. Today’s declaration signals our commitment to being global digital leaders.”
I searched in vain for news of any similar agreement involving Korea and the United States, and found no rough equivalent of the Korea-EU agreement. Perhaps history is going to repeat itself, for lack of government leadership or the inability to forge a genuine public-private partnership in the U.S. I recently viewed former Vice President Al Gore's keynote speech to industry leaders at the 1994 Information Superhighway Summit in Los Angeles. Korea started its highly successful, decade long Korea Information Infrastructure program the following year, with government leadership but also active industry involvement and facilities-based competition. Over the same decade, relatively little was done to build a national fiber optic infrastructure in the U.S. It would seem that one of the reasons for this was the inability of government to lead and industry in the U.S. to actively collaborate in constructing an essential infrastructure for the 21st century.
Somehow I missed reading the Forbes article earlier this year on "Why South Korea will be the next global hub for tech startups." It was published in February and, while it gives an unabashedly optimistic view of prospects for venture firms and start ups here, it is definitely worth reading. (click on the graphic to see a full size version)
I agree with a number of points made in the short article, including the new "creative economy" direction charted by the Park Geun-hye administration and the fact that mobile game developers are on the leading edge of developments here. However, the changes it describes may take longer than anticipated insofar as they are generational and involve a shift in the cultural mindset, even for younger Koreans, toward a completely global outlook.
This post was prompted by an article entitled "Five Theories of Unification," by Victor Cha of Georgetown University who also holds the Korea Chair at CSIS. It appeared in The Korea Joongang Dailyand in a slightly different form on the Korea Chair Platform. The article briefly sketches five possible perspectives on unification that correspond roughly to different periods in Korean history and different presidential administrations. However, readers of this blog will not be surprised to learn that I found another very persuasive perspective on Korean unification missing from Professor Cha's analysis, and that is the communication and network theoretic point of view. (Check out my prior numerous posts on this topic here.) My hunch that something was missing in the five theories was confirmed by viewing President Park Geun Hye's historic speech in Dresden earlier this year, where she laid out her three-point agenda for Korean unification. The accompanying YouTube video contains the Arirang Television live broadcast of her speech, with simultaneous translation in English (the speech begins at 35:44 of the video, should you choose to view it here).
As I've discussed in earlier posts, communication is in many ways the essence of the unification problem, both in terms of digital network infrastructure for modern mobile broadband and in terms of human communication across what President Park described in her speech as a "wall of distrust" and a "socio-cultural" divide that has grown on the Korean peninsula over the past 70 years.
I also found it highly significant that President Park chose the Dresden University of Technology for her speech, which she began with reference to a Korean saying that "the impact of education lasts for generations and beyond." She followed that by noting that she herself had majored in electrical engineering and that she firmly believed science and technology were the key to unlocking a nation's growth. "This is why I established the Ministry of Science, ICT and Future Planning early in my presidency and this is also precisely why I have been highlighting the importance of building a creative economy."
All of the three main points in President Park's Dresden speech involve strong elements of human communication of different sorts, ranging from reunification of divided families, to building telecommunications, transportation and other forms of infrastructure. Communication is arguably, as Wilbur Schramm wrote years ago, the "fundamental social process." As Korea's continued tragic division shows, it is also central to politics and economics. Finally, it is an essential ingredient in education at all levels, underscored over the past several years by the rapid rise of massive open online courses (MOOCs). Near the conclusion of her speech, President Park envisioned a day when young students from North and South Korea (like those in her audience at Dresden University of Technology) would study together side by side on a unified Korean peninsula.
The Economist published a nice infographic recently that shows the top three internet companies in a number of countries, ranked by peak market valuation. (click on the graphic here to see the top part of the infographic, or click here to go directly to the full, interactive infographic) South Korea ranks fifth on the graphic, which is remarkable given the much larger population of three of the other four countries ahead of it. The three largest internet companies in Korea, in rank order, are Naver, Nexon and NCSoft. Naver, of course, is a Korean language "search" portal, while the other two companies specialize in online games.
The data for The Economist infographic and article came from the World Startup Report, a not for profit organization. Another graphic published by that organization helps to put the size of Korea's internet companies in global context. (click on graphic to see a full size version) As noted by The Economist, Google is larger than the peak value of the companies in all other 48 countries combined.
An interesting article this morning in The Korea Joongang Ilbo, headlined "Mobile pay market is on the move." But is it really? As noted by the article, "With more customers using mobile finance services, a battle has begun in the banking and telecommunications world. KakaoTalk, the nation’s largest messenger app, plans to begin handling mobile transactions and payments as early as next month. China’s largest online payment company, Alipay, also is working to become an electronic prepayment issuer under Korean law. Financial companies are scrambling to secure customers by partnering with KakaoTalk, while at the same time continuing to develop their own electronic purses." The article was accompanied by a graphic, included with this post (click to see a full size version) that shows the recent increase in number of registered mobile banking users, which now surpasses 40 million. I recommend reading of the article for a quick update on current trends.
