Cha Moon-hyun is sure of one thing: the company he runs, Fund Online Korea, is set to activate its business by the end of this month. He has a clear idea of the company’s ambition, to create a new, low-cost, easy-to-use digital platform for selling locally domiciled mutual funds.

But many critical aspects – not just details – have yet to be hammered out.

Cha, until recently CEO of Woori Asset Management, was appointed as the first president and CEO of Fund Online. He has to juggle 41 asset management firms who are the company’s biggest shareholder base, plus the industry association that has played a decisive role in getting the platform off the ground, the Korea Financial Investment Association (Kofia).

Kofia in turn continues to negotiate with both the securities regulator and with its own membership, which includes not just fund houses but the banks and securities brokers that are the most powerful financial institutions in Korea.

Cha declines to provide specifics about how he would define Fund Online’s success. There is no target market share or goal about volumes, at least not for public consumption.

The platform exists to serve the smaller, independent asset managers (including foreign-owned ones), because the biggest players can survive by selling funds through the network of a parent bank, brokerage or insurer.

But to give Fund Online the necessary scale and industry buy-in, it is registering products from the big, tied asset managers too. The Financial Supervisory Commission strong-armed these players into cooperating, according to independent fund manager executives. (Cha is more diplomatic: “There have been conflicts with large, successful distributors, but the government persuaded them to join.”)

One reason why bigger players may not be so keen on Fund Online is its pricing model, which requires funds sold over its platform charge just one-third the fees charged in other distribution channels. How this will be monitored and enforced is one of the details yet to be ironed out.

In the meantime, Cha’s newly assembled team is busy tweaking an online service that by the end of this year should have around 1,000 different products available. Cha says two-thirds of these should be equity funds, although bond and alternative products will also be available.

Managing these internal contradictions is haphazard; Cha says Fund Online is guided by a committee including the five largest asset managers, plus Kofia. But there is no formal corporate governance framework; at least not yet. “We need the FSC and Kofia members to work together,” Cha says.

There is similar grey areas when it comes to Fund Online’s ultimate target audience. It is generally agreed – by Cha and by external fund executives – that young people, in their 20s and 30s, will be the initial focus.

This generation is obviously comfortable with conducting affairs online. They will no doubt take notice of low fees, but to sweeten the pot, the government is introducing a tax deduction for people with an annual income of below W50 million (about $47,000). Any qualified person investing at least W6 million can receive a tax refund of W400,000.

There are plenty of young people whose income fits the profile. But by definition they are not rich, and with very low fees at hand, it’s hard to see how Fund Online will generate enough revenue to cover its expenses, let alone return profits to its shareholders.

Aside from targeting young people, the firm's ambitions are less clear. Cha says one attractive target is members in corporate pension plans, particularly those in defined-contribution regimes. This market is divvied up among the biggest banks and insurance companies. It won’t be easy to crack.

Another option is to go after high-net-worth individuals. Cha says this segment will have to be left to securities firms and other players who can provide tailored advice and high-performing products. But fund executives in Seoul hope Fund Online does go after rich individuals – they want to see it wrest some of this business away from the big brokers, and reckon it is necessary if Fund Online is to make a profit.

All of these internal contradictions can be overcome if the platform is very good and user-friendly – and if it gets noticed by lots of people. For now, the branding and marketing strategy is relying mainly on local media. The Korean press is influential and can help an initiative such as Fund Online. But eventually reporters will move their attention elsewhere. Media attention is not a sustainable marketing strategy.

The critical missing piece is an independent financial advisory industry. The original ideas behind Fund Online included licensing IFAs, but the regulator has concerns about potential mis-selling, and fund executives allege big banks have been fighting the measure in private.

The good news is that the FSC is expected to come out with rules for IFAs this spring, and hand out the first licences in June or July. That would be timely enough to grow together with Fund Online, potentially transforming Korea’s asset management industry.