Payment and Settlement Business Trends in Investment Companies
As of late March 2011, 25 investment companies provided financial services via 6 retail payment systems directly or indirectly.
Enforcement of Capital Market Consolidation Act opened the retail payment market to investment companies, and following Tong Yang Investment Bank which first entered into the business in July 2009, 25 service providers are now competing in wire transfer market.
They provide services under 6 retail payment systems of electronic banking network, interbank funds transfer system, interbank CD system, CMS, giro and PG systems.
Their turnover ratio has remained comparatively lower than that of banks.
Total amount of funds transferred via investment companies is steadily on the rise.
Spurred by aggressive moves by investment companies to attract customers, less and less funds have been transferred over interbank network, which means more funds traded over retail payment system.
The monthly average turnover ratio of payment and settlement accounts stands at 113.5% for investment companies, lower than 846.2% of banks.
CMA business has been slowed down as well, since investment companies joined retail payment system.
CMA business started to grow at a slower pace after August 2009, after having enjoyed continued expansion.
The slowdown was rather contrary to investment companies' initial expectation that CMA should become much more favored by customers for greater convenience made possible after they started to provide direct services via payment and settlement system
Investment companies have not produced strong results so far.
It seems they have not achieved much progress so far, considering their use of payment and settlement network and growth in CMA.
However, it is a bit early to draw any conclusion, in that their efforts to enter into payment and settlement business are ultimately aimed at cross-selling by expanding CMA customer base.