Seeking Platform Finance as an Alternative Model of Financing for Small and Medium Enterprises in Korea

Platform finance is emerging as an alternative finance for SMEs by suggesting a new funding source based on a new technology named FinTech. The essence of this business is the adapting ICT challenges to the financial industry that can adequately reflect risk assessment using Big Data and effectively meet individual risk-return preference. Thus, this is evolving as an alternative to existing finance in the form of P2P loans for Micro Enterprises and supply-chain finance for SMEs that need more working capital. Platform finance in Korea, however, is still at an infant stage and requires policy support. This can be summarized as follows:“Participation of institutional investors and the public sector,” meaning that public investors provide seed money for the private investors to crowd in for platform finance.“Negative system in financial regulations,” with current regulations to be deferred for new projects, such as Sandbox in the UK. In addition,“Environment for generous use of data,” allowing discretionary data sharing for new products,” and “Spreading alternative investments,” fostering platform finance products as alternative investments in the low interest-rate era.