[DigitalToday reporter Ji-young Lee (이지영)] Deposit-token pilots are extending into payment gateway companies, merchant networks and cross-border payments, shifting the focus of the commercialisation race from issuance to where they can be used. The first-phase pilot was limited to some merchants. In the second phase, a key task is sharply expanding use cases by tapping merchant networks of card companies and payment gateways.

Work to connect bank-issued deposit tokens to existing online and offline payment networks is also accelerating as payment gateway companies such as Danal and Toss Payments join a government-led project.

The second phase of Project Hangang, involving NHN KCP and Shinhan Bank, also focuses on turning deposit tokens into an everyday means of payment by expanding use cases and improving payment convenience. A key point is lowering merchants' burden by enabling use of existing payment networks without separate terminal replacements or large-scale system builds.

If a structure is implemented in which payment and settlement occur at the same time, it is also expected to reduce small merchants' fee burdens and shorten settlement periods.

In South Korea, there is testing of deposit tokens for real-life use. Abroad, there have also been moves to broaden their scope to cross-border payments.

KB Kookmin Bank verified yen-based deposit-token payments with Japan's MUFG Bank, expanding an experiment centred on domestic retail payments into the cross-border payments area.

Competition over deposit tokens is expected to depend less on issuance technology itself than on how quickly banks and payment gateway companies can build a real usage ecosystem through integration, securing merchants and improving rules.

• Danal joins a Ministry of Science and ICT project to expand deposit-token payment infrastructure • NHN KCP joins the second phase of Project Hangang with Shinhan Bank • Toss Payments joins a deposit-token payment-infrastructure pilot • KB Kookmin Bank verifies deposit-token payments with Japan's MUFG Bank

The scope of inclusive finance is expanding beyond support for mid- to low-credit borrowers to financial blind spots by industry and employment type, including foreign-worker-hiring farmers and fishers, daily construction workers and small merchants.

Banks are rolling out preferential accounts, livelihood-stability loans and large-scale inclusive loans in succession. They are moving to supply products tailored to funding needs and income structures rather than grouping vulnerable borrowers into a single category.

In particular, small merchant finance showed a shift away from reviews centred on collateral and existing credit scores. Moves included expanding credit evaluations that reflect sales and commercial-area information and increasing loan support linked to local governments.

An increase in inquiries on the borrowing limit for Pinda's livelihood-stability loan also shows that demand for emergency living funds among mid- to low-credit borrowers remains large.

With Naver Pay also supporting payment fees, competition in inclusive finance is expanding to cover not only loan supply but also improving credit evaluation and reducing financial costs.

• Hana Bank launches a preferential account for farmers and fishers hiring foreign workers • BNK Busan Bank launches a preferential loan for daily construction workers • IBK Industrial Bank of Korea launches a 1 trillion won inclusive loan for mid- to low-credit borrowers • Daol Savings Bank launches a livelihood-stability loan for mid- to low-credit borrowers • Pinda sees concentrated real demand for its livelihood-stability loan... 13,000 limit inquiries in a month • KakaoBank supports 17 billion won in loans for small merchants in 6 Seoul districts • Small merchant credit evaluation to include sales and commercial areas... applied to 220 billion won across 16 banks • Naver Pay supports payment fees for small merchants through 'Npay Connect'

As concerns grow about overheating surrounding single-stock leveraged products, responses by financial authorities and the financial investment industry are also quickly intensifying.

The industry has taken voluntary measures such as spreading out rebalancing timing and reducing liquidity provider trading. Authorities are also considering additional rules, including directly adjusting investment limits and leverage multiples.

A key background cited for stronger rules is that when funds concentrate in specific stocks, it can increase market volatility and enlarge losses for individual investors.

Financial Services Commission Vice Chairman Eo Kwang-ok (이억원) also said individual investment limits could be introduced if overheating continues, putting weight on market stability. The focus of future rules is expected to be on easing concentration and reducing shocks in rapidly changing markets rather than blocking the products themselves.

• Single-stock leverage rules switch on... how far will additional steps go? • Financial investment industry responds voluntarily on single-stock leverage... spreads rebalancing, cuts LP trading • Authorities push investment limits for single-stock leverage... will also adjust multiples in emergencies • Financial authorities review additional steps for single-stock leveraged ETFs • Eo Kwang-ok: "If single-stock leverage overheating persists, we will review individual investment limits"

Capital market rule changes showed diverging trends, strengthening discipline on duplicate listings and undervalued companies while reducing tax incentives to draw funds into South Korea's stock market.

The Korea Exchange plans to strengthen reviews of duplicate listings from Aug. 3 to more strictly scrutinise damage to parent-company shareholder value from so-called split listings.

From November, disclosure will also begin of whether listed firms have low price-to-book ratios if they have stayed in the bottom tier within their industries for three straight years. Pressure is expected to rise for companies to improve corporate value and return value to shareholders.

Still, concerns are being raised that a reduction in RIA tax benefits could lower the investment appeal of domestic stocks, leaving a task of pushing both stronger market discipline and expanded incentives for long-term investment.

• 'Split listings' face tougher scrutiny... new duplicate-listing review standards take effect Aug. 3 • Even RIA tax benefits are being cut... concerns grow over faster outflows from local stocks • If bottom-tier in industry for 3 straight years, 'low PBR' will be disclosed... first list in November

As the financial sector wraps up first-half earnings announcements, a clear slowdown in profitability has emerged, especially among internet banks and regional financial groups.

K Bank's net profit fell 28.7 percent, but its loans to small office-home office operators nearly doubled, showing potential to expand corporate finance. Results at IBK Industrial Bank of Korea and iM Financial also fell from a year earlier.

Regional financial groups need new growth strategies to overcome limits of scale, and Sh Suhyup Bank focused on defending profitability while assets grew.

• K Bank posts lower first-half net profit... 'SOHO' nearly doubles • K Bank first-half net profit 60.1 billion won... down 28.7 percent from a year earlier • Regional financial groups post weaker first-half results... rethink competitiveness after BNK-JB merger collapse • IBK Industrial Bank of Korea first-half net profit 1.44 trillion won... down 4.4 percent from a year earlier • iM Financial first-half net profit 295.6 billion won... down 4.4 percent from a year earlier • Sh Suhyup Bank first-half total assets 70 trillion won... pretax profit 203.4 billion won

Brokerages are expanding business areas into short-term promissory notes, token securities, retirement pensions and overseas investment services, accelerating efforts to diversify revenue sources.

Samsung Securities is nearing the final stage of approval procedures for short-term promissory notes and is preparing to expand its business as a mega investment bank. Shinhan Securities is moving to pre-empt the STO market by increasing the number of fractional-investment account management operators.

Mirae Asset Securities sharply increased retirement pension reserves, and Hana Securities strengthened its wealth management and overseas investment base by starting trading through a unified account for foreigners.

Korea Investment & Securities and Samsung Asset Management also revamped stock and ETF information and trading screens, showing competition spreading beyond product supply to platform convenience and expanded investment information.

• Samsung Securities clears a hurdle for short-term promissory note approval... decision could come as early as September • Samsung Securities seeks short-term promissory note approval again... Meritz still in the fog • Shinhan Securities expands STO business... fractional-investment account management to 4 operators • Korea Investment & Securities revamps MTS stock and ETF screens • Mirae Asset Securities Q2 retirement pension reserves up to 9.58 trillion won • Hana Securities starts unified-account trading for foreigners with Futu Securities • Samsung Asset Management's FunETF expands information to 5,500 U.S.-listed ETFs

Other major moves in the financial and fintech industries were also summarised.

Major financial groups are pursuing both AI-based innovation in operations and counselling and an expansion of tailored deposit products to boost competitiveness.

Financial holding companies are laying an AX foundation by adopting generative AI and fostering talent. Banks are also segmenting customer bases with group-buying deposits and senior-focused deposits.

A two-track strategy of pursuing both technological innovation and product differentiation is becoming a key axis of competition among banks.

• KB Financial develops operations and counselling AI based on Google's Gemini... accelerates AX • KB Kookmin Bank launches a group-buying time deposit with interest rates that rise with sales volume • Shinhan Financial recruits for 'Shinhan Career Next' to foster finance IT and AI talent • Shinhan Bank adds sales of 'Shinhan SOL Mate time deposit' with a top annual rate of 3.5 percent

They are strengthening both profitability and regional foundations by pursuing large development-finance deals and expanding regional hubs at the same time.

Hana Financial expanded large-scale project finance and its provincial asset-management hubs, and Woori Financial and NH Nonghyup Financial also moved to expand their non-capital-area business bases through innovation-city financial towns and locally tailored finance.

• Hana Financial arranges 4 trillion won project finance for the Jamsil sports and MICE development • Hana Bank expands 'Hana The Next Lounge' outside Seoul... first hub in Daegu • Woori Financial opens a financial town in Jeonbuk Innovation City... hubs for the 4 major financial groups gather • NH Nonghyup Financial to 추진 a 'local-tailored finance project' in the second half

Internet banks are strengthening competition as everyday finance platforms by adding convenience to investment, remittance and foreign-currency services.

KakaoBank improved access to investment content, and K Bank and Toss Bank focused on increasing usage frequency in daily finance with AI-based remittances and automatic foreign-currency saving.

A strategy to go beyond simple deposits and loans and tie customers' repetitive financial behaviour into platforms is becoming clearer.

• KakaoBank 'Investment' tab users reach 5.43 million... in 3 months since launch • K Bank launches 'AI transfer' that sends remittances by sentences and voice • Toss Bank launches a 'foreign-currency piggy bank' that saves dollars every day

Fintech companies are moving to support payment fees and to advance card-discovery services. They are also expanding infrastructure businesses linking public data with corporate work systems.

Competition in services to improve financial convenience for small merchants and consumers is expanding into B2B areas such as data standardisation and building corporate ERP systems.

The business arena for fintech firms is widening beyond consumer-facing payment services into companies' data use and management areas.

• Naver Pay supports payment fees for small merchants through 'Npay Connect' • Hecto Financial advances Samsung Wallet's 'Find Popular Cards' • Kookmin Bank? (not present) • 쿠콘-코스콤 cooperate to convert public data to standard APIs • Webcash builds 'rERP' for Korean Register and KATRI Testing & Research Institute