Press Releases - Financial Services Commission

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May 26, 2019

Results of Evaluation for Preliminary Approval for Additional Online-only Bank Licenses

The FSC rejected applications filed by ‘Kiwoom Bank’ and ‘Toss Bank’ for preliminary approval for online-only bank licenses as the two applicants1 both fell short of the standards for online-only banks by an evaluation committee.The evaluation committee composes of independent experts concluded that Kiwoom Bank lacked innovativeness and feasibility in its business plan, while Toss Bank had issues concerning its financing ability to raise capital. The evaluation committee, therefore, recommended disapproval of the two bidders.Based on the recommendation by the evaluation committee and the evaluation result submitted by the FSS, the FSC decided not to allow both ‘Kiwoom Bank’ and ‘Toss Bank’ preliminary approval for online-only bank licenses.The FSC plans to resume its procedure in the third quarter to receive new applications for online-only bank licenses.
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May 23, 2019

FSC Holds Korea Fintech Week 2019

Korea Fintech Week 2019 is held from May 23 to 25 at Dongdaemoon Design Plaza (DDP), Seoul. The three-day event is the first global fintech gathering hosted by the FSC and the FSS to draw public attention to fintech innovation and provide fintech start-ups and entrepreneurs with business opportunities home and abroad.The event will provide fintech firms opportunities to present their innovative services to domestic and global investor for attracting investment for scale-up and pioneering into overseas markets.Separate seminars will be held to discuss regulatory developments and fintech innovation across the world, while 52 booths are set up to offer participants firsthand experience of innovative fintech services. Korea Fintech Week 2019 will be featured with other various events such as job fair and financial education programs.Highlights from Chairman’s Keynote SpeechIn his keynote speech at the opening session, FSC Chairman Choi Jongku shed light on challenges and opportunities that fintech has brought to the financial sector.Albeit its late start in global competition for fintech leadership, Korea’s fintech has been growing fast. Korea is well positioned to become a fintech leader with its advanced ICT infrastructure, trend-savvy consumers and the government’s support for financial innovation. Since the FSC announced its fintech policy roadmap last year, progress has been made in paving a way for promoting fintech and financial innovation. New legislations for online-only banks and financial regulatory sandbox were enacted. New policy initiatives for open banking system and financial big data are in the making.Chairman Choi outlined the government’s plan to promote fintech and financial innovation as follows:▪ Support for fintech start-upsThe FSC will provide fintech start-ups with comprehensive support throughout their growth cycle - entrance, scale-up and expansion. Since the financial regulatory sandbox was launched in April this year, 26 firms have
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May 16, 2019

Regulatory Reforms to Promote Robo-Advisory Services

The FSC reformed the「Financial Investment Business Regulation」to promote robo-advisory services:1. Robo-advisory firms will be allowed to manage funds and entrusted assets commissioned by asset management firms. (scheduled to be implemented from July 24, 2019)Under the current regulation, asset management firms are not allowed to commission their business of managing funds and entrusted assets to robo- advisory firms. The regulation was revised to allow asset managers to commission such business to robo-advisors on condition that the asset managers are responsible for investor protection.2. Individuals will be allowed to participate in Koscom’s robo-advisor testbed, which will accept applications from June 3, 2019.Currently, the testbed is open only to firms including fintech firms, not to individuals, given that only companies are allowed to provide robo-advisory services. Robo- advisors verified through the testbed are allowed to provide investment advisory and entrusted services. To commercialize robo-advisory services after they pass the test, individuals are required to register as an asset management firm or to form a partnership with asset management firms.3. Capital requirement was eased to make it easier for small fintech firms to provide non-face-to-face services via robo-advisors. (implemented from March 20, 2019)Previously, discretionary investment businesses were required to have additional capital of KRW4 billion besides the minimum capital of KRW1.5 billion to provide non-face-to-face services through robo-advisors. To facilitate the entry of small fintech firms in robo-advisory services, the capital requirement of additional KRW4 billion was abolished.4. Robo-advisors will be allowed direct management of fund assets. (scheduled to be implemented from July 24, 2019)Currently, robo-advisors are not allowed to directly manage fund assets, while they are allowed to manage entrusted assets. The regulation was revised to allow robo- advisors to manag
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May 16, 2019

FSC Secretary General Holds Meeting on Soundness of Household and Individual Business Loans

FSC Secretary General, Sohn Byungdoo convened a meeting with the FSS and the KIF on May 15, to monitor the soundness of household and individual business loans.Summary of Secretary General’s remarksSecretary General Sohn stressed the need to exert more policy efforts to manage the soundness of household and individual business loans, and supporting financially vulnerable borrowers.Mr. Sohn said household loan default rate at the end of January 2019 stood at 0.84%(provisional figure), a slight increase compared to the end of last year(0.75%). However, he diagnosed the level of default rates1 is stable in general compared to last year. Individual business loan default rate at the end of first quarter, 2019 (0.75%) showed an increase as well compared to the previous month (0.63%), however, the default rate is yet reached a significant level.2.Mr. Sohn said that the recent increase in default rate is attributed to relatively loose screening on business loans, which has been on the rise in the recent few years; and rise in default rate in regional financial institutions3. But he stressed that since regional banks and non-bank financial firms4 have sufficient loss absorbing capacity, the risk of increased default rate to the financial system in general is restricted.Secretary General said the debt-service-ratio(DSR) will be fully implemented to the non-banking sector starting from June this year, and the financial regulators will thoroughly inspect that non-bank financial firms are appropriately operating the rent- to-interest(RTI) ratio and loan-to-income(LTI) ratio regulations.Mr. Sohn evaluated the financial industry’s voluntary debt reduction program for defaulted household loan borrowers is smooth-sailing, and emphasized that the government will ensure facilitation of debt reduction program tailored to each individual business loan borrower as well.
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May 15, 2019

Implementation of Basel III Regulations to be Delayed for New Online-only Banks

The FSC approved amendments to the 「 Regulation on Supervision of Banking Business」and「Regulation on Supervision of Financial Holding Companies」on May 15, 2019. According to the revised regulations, new online-only banks will be granted two to three years of grace period for the implementation of Basel III regulations.► (Capital regulations) Basel I regulations will apply for the first three years since the launch of a new online-only bank. Basel III regime will be phased in from the fourth year of business.► (Liquidity Coverage Ratio) 80% or above in the first year; 90% or above in the second year; full implementation of Basel III in the third year of business.► (Net Stable Funding Ratio) Implementation will be deferred for the first three years before its full implementation from the fourth year of business.► (Leverage ratio) Implementation will be deferred for the first three years before its full implementation from the fourth year of business.The revised regulations will go into effect on May 21, 2019.New applicants for preliminary approval for online-only bank business will be required to submit soundness management measures based on the revised regulations.* Please refer to the attached file for details.
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May 15, 2019

Third Batch of Financial Service Providers Designated as 'Innovative Financial Services' for FSC's Regulatory Sandbox

The FSC designated eight additional financial services as ‘innovative financial services’ to be accepted into financial regulatory sandbox, following the first and second batch of financial services announced on April 17 and May 2. As of May 15, 26 services are approved to be tested in the financial regulatory sandbox.The eight financial services will be submitted to Financial Innovation Evaluation Committee and FSC within June for evaluation.Overview of designated innovative financial services1. A loan brokerage service that provides loan products offered by different financial firms, and credit evaluation service using mobile phone usage record such as service enrollment period, roaming, and bill payment record using mobile phones. (Finnq)2. A 24-hour artificial intelligence (AI) based insurance consultation and sales service.(Persona System)3,4. A payment system using smart-phone-embedded NFC for merchants without fixed stores such as food trucks and street vendors that enables payment of products they sell without credit card payment device or POS terminal. (Paycoq, Korea NFC)5,6,7. A loan brokerage service that provides various loan conditions including fixed interest rates and loan limit of different loan products tailored to each consumer. (MiBank, Finmart, teamwink)8. A P2P money transfer service using QR codes. (BC Card)
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May 02, 2019

Second Batch of Financial Service Providers Designated as 'Innovative Financial Services' for FSC's Regulatory Sandbox

The FSC designated nine additional financial services as ‘innovative financial services’ to be accepted into financial regulatory sandbox, following the first batch of financial services announced on April 17. As of May 2, 18 services are approved to be tested in the financial regulatory sandbox among the 105 services applied for priority review since January.Additional application for the financial regulatory sandbox will begin at the end of June.Overview of designated innovative financial services1. A loan application smart phone service through which a consumer can apply for a personal loan based on optimal loan conditions including interest rates and loan limit offered by multiple financial firms. (Finda)2. Toss(smart phone application)-based loan application service that provides fixed interest rates of various loan products offered by multiple financial firms. (VivaRepublica)3. A loan application service for consumers with mid-to-low credit scores that enables comparing and negotiating loan conditions of various loan products. (NHN Payco)4. A financial service that provides various loan conditions including interest rates and loan limit of different loan products tailored to a consumer’s credit score and annual income. (Finset)5. A financial service that provides information of various car loan products based on the car owner’s credit score, accident history, driver information, and driving experience when he/she enters his/her plate number. (Fintech Inc.)6. A blockchain technology-based financial service that computerizes and updates the list of shareholders of non-listed SMEs, and provides assistance for P2P over- the-counter trading of such stocks. (KOSCOM)7. A blockchain technology-based financial services that issues and distributes mortgage-backed securities(MBS) in a form of electronic securities. (Kasa Korea)8. A ‘drive-thru money exchange and withdrawal service’ under KRW 1million at drive-thru restaurants and car parks near airports. (Woo
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Apr 24, 2019

Government Proposes Measures to Improve Corporate Practices of Annual General Meetings

The Financial Services Commission (FSC) and the Ministry of Justice (MOJ) jointly proposed comprehensive measures to improve corporate practices of annual general meetings (AGMs) in an attempt to encourage the participation and engagement of shareholders.BackgroundAGMs serve as a company’s highest decision-making body. However, the current practices in many companies – e.g. concentration of AGMs on specific dates1 and fast-paced proceedings2 – discourage shareholders’ participation, making AGMs a mere formality. Shareholders’ active participation in AGMs has become all the more important recently with the abolition of ‘shadow voting’ system3 and growing public attention to the role of institutional investors as shareholders.Against this backdrop, the proposed measures are intended to help companies boost participation of shareholders in AGMs and equip shareholders with more information to better exercise their voting rights.Measures proposed1. Companies to reach out to shareholders by e-mailWith shareholders’ home addresses alone, companies have difficulty in contacting shareholders to notify the convocation of AGMs and encourage participation. To enable companies to reach out to their shareholders by e-mail, the FSC will allow listed companies to receive their shareholders’ e-mail addresses from securities firms.2. Companies to be allowed to grant incentives to participantsUnder the Commercial Act,4 it is unclear whether companies are allowed to provide shareholders with a ‘small gift’ as an incentive for participation in AGMs. To clarifythis matter, the MOJ will provide an authoritative interpretation: For the purpose of increasing voting turnouts or securing quorums at AGMs, companies are allowed to grant participants a benefit at a level that does not breach social norms.3. Convenience of electronic voting to be enhancedThe current requirement of the accredited certificate of authentication causes inconvenience to shareholders in electronic
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Apr 17, 2019

First Batch of Financial Service Providers Designated as 'Innovative Financial Services' for FSC's Regulatory Sandbox

The FSC announced the first batch of financial service providers accepted into its financial regulatory sandbox. Among 19 applications shortlisted for priority review, nine firms were first allowed to test their innovative services and products in the regulatory sandbox. For the remaining 10 applications, the FSC will soon decide whether to accept them into the regulatory sandbox at its meeting scheduled for May 2, 2019.Overview of services accepted into financial regulatory sandbox1. Convenient, low-cost financial services combined with mobile communication services (KB Kookmin Bank)2. Stock lending platform based on blockchain technology offering stock lending and borrowing services for individual investors (Directional)34. ‘On-off traveler’s insurance’ for frequent repurchasers to buy traveler’s insurance policy without verification or additional explanation on the product (NH Property and Casualty Insurance / Rainist)5. Credit card based money transfer service using PayFan application (Shinhan Card)6. Credit card payment service using QR codes for unregistered small stores such as street vendors (BC Card)7. Credit assessment using Shinhan Card’s affiliate merchant data such as sales record (Shinhan Card)8. Online easy payment service using mobile text message verification (Payple)9. P2P finance service for local residents to invest in new renewable energy generation businesses (Root Energy)
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Apr 01, 2019

Financial Regulatory Sandbox Launched

The FSC has officially launched a financial regulatory sandbox today as the Special Act on Financial Innovation Support takes effect on April 1, 2019.Since the preliminary application period for financial regulatory sandbox was open last January, the FSC received 105 applications. Among them, 19 applications were shortlisted for priority review by an evaluation committee, composed of government officials and private experts. The evaluation committee held its first meeting today to discuss how to run the regulatory sandbox scheme.The short-listed applications will be evaluated with focus on whether their technology and services would bring about innovativeness, inclusiveness and positive effect.Upon submission of official applications by the short-listed candidates from April 2 to April 4, the first and second batch of financial service providers to be admitted to financial regulatory sandbox will be designated in April 17 and May 2, respectively.For the remaining 86 applications received during the preliminary application period, the FSC will complete its review procedure in the first half of this year.
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Mar 28, 2019

FSC Recieved Three Applicants for Preliminary License for Online-only Bank

Three applicants – Kiwoom Bank, Toss Bank and Anyband Smart Bank1 - have submitted their applications for online-only bank license:ㆍKiwoom Bank is a consortium, led by Kiwoom Securities, comprised of 28 shareholders including Hana Bank and SK Telecom.ㆍToss Bank is led by Viva Republica, which operates a mobile financial application called Toss, with other 7 shareholders including Hanwha Investment Securities.ㆍAnyband Smart Bank is led by three individuals with participation of other shareholders still under discussion.The FSC will approve preliminary license for one or two new online-only banks in May. The FSS will conduct its reviews of submitted applications from April to May.* Please refer to the attached file for details.
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Mar 25, 2019

FSC to Delay Implementation of Basel III for New Online-only Banks

The FSC will grant new online-only banks a grace period of two or three years for the implementation of Basel III regulations, scheduled to be fully effective from 2020 for other banks – e.g. traditional banks and existing digital banks. As the FSC is preparing to issue a preliminary license to one or two additional online-only banks in May, the deferral is to give new online-only banks time to adapt to a new regulatory regime, easing their regulatory burden at the early stage of business operation. The FSC will propose amendments to relevant regulations1, expected to take effect in May. The proposal will be open for public comment from March 27 to May 7, 2019.► (Capital regulations) Basel I regulations will apply for the first three years since the launch of a new online-only bank. Basel III regime will be phased in from the fourth year of business.► (Liquidity Coverage Ratio) 80% or above in the first year; 90% or above in the second year; full implementation of Basel III in the third year of business.► (Net Stable Funding Ratio) Implementation will be deferred for the first three years before its full implementation from the fourth year of business.► (Leverage ratio) Implementation will be deferred for the first three years before its full implementation from the fourth year of business.* Please refer to the attached file for details.
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Mar 21, 2019

Financial Policy Plans to Support Innovation-led Growth

The FSC announced financial policy plans to support Korea’s innovation-led economic growth. At a proclamation ceremony, President Moon Jae-in said further growth of innovative start-ups in Korea are held back by banks’ lending practice, still centered on real estate collateral and financial records, resulting in a “financial divide” between large businesses and start-ups. That requires finance to play a more active role in funding innovation and sharing risk. FSC Chairman Choi JongKu laid out a comprehensive policy scheme to create a financial ecosystem for innovation-led growth.I. Overhaul bank’s corporate loan approval systemBanks’ corporate loan approval system will be overhauled to help start-ups - often with limited collateral - secure loans using their innovative ideas, technology and other various assets as collateral. Under the new loan approval system, the FSC aims to enable innovative start-ups and SMEs to secure loans worth KRW100 trillion over the next three year.► A new collateral scheme will be introduced1 in which corporate borrowers are allowed to combine various assets including patent, production equipment and inventories as a single package of collateral.► A comprehensive evaluation model which assesses the potential value of a company’s technology as well as creditworthiness will be introduced as early as 2020.II. Capital market reformsThe FSC will help innovative start-ups raise funds based on their growth potential. By easing listing requirements, the FSC aims for Kosdaq listings of 80 companies in high-growth, high-tech sectors including biotech over the next three years.► The government aims to raise KRW15 trillion over the next five years with public and private investments to support scale-ups in new-growth sectors such as future vehicles, bio-health and fintech.► The FSC will expand a pool of venture capital with regulatory reforms for private equity funds (PEFs), securities firms and professional investors.2► Kosda
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Mar 07, 2019

Financial Policy Roadmap for 2019

The FSC laid out a financial policy roadmap for 2019 aimed at promoting financial innovation, ensuring trust in finance and securing financial stability.► Financial innovation will be accelerated as the newly-enacted laws on online-only banks and financial regulatory sandbox take effect this year. Finance will also play an active role in financing SMEs and start-ups to boost economic vitality.► The FSC will establish a consumer-oriented system in which consumers are better informed and protected. The FSC will ensure fairness and transparency to protect investors and shareholders.► The FSC will remain vigilant against potential risks with close monitoring on financial markets and active policy responses.Key policy tasks1. Financial support to boost economic vitality► The government will provide a total of KRW 4.6 trillion in government-backed loans and loan guarantees for small and medium-sized shipbuilders, equipment and auto parts manufacturers.► The government launched in January a financial support program of KRW 15 trillion over the next three years to support SME’s investment in equipment, environmental safety facilities and business reshuffling.► The FSC will overhaul financing mechanisms to enable start-ups and SMEs to borrow or raise funds based on their growth potential.2. Financial stability and pre-emptive responses► The government will continue its policy efforts to curb household debts. Last year, household debt growth slowed down to 5.8%, the lowest since 2013. The government aims to keep household debt growth this year at the similar level – above 5% to below 6%. The debt service ratio (DSR), first introduced in the banking sector in October 2018, will be adopted in the non-banking sector as well in the second quarter of this year.► The government will preemptively manage corporate debt risks with enhanced evaluation system for credit risks and market-driven corporate restructuring.► The FSC will establish a regulatory and superv
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Feb 25, 2019

Banks' Financial Payment System To Be Open to Fintech Firms

The FSC proposed its plan to establish an open banking system which would grant fintech firms access to banks’ payment network, in an effort to encourage development of new payment services and greater competition in the financial sector. The FSC also plans to overhaul the current regulatory framework on electronic financial business to promote innovation and competition in financial payment services.OPEN BANKING SYSTEM TO BE INTRODUCEDThe current financial payment network has a closed system accessible only by banks.Under the current system, even banks are allowed to process their own bank account-based transactions only. Although banks jointly launched an open API system in August 2016, the access to the API system has been limited only to small fintech firms, charging relatively high fees, about KRW400 to 500 per transaction.Against this backdrop, the transition to an open system will proceed in three phases:► [Phase 1] Banks’ voluntary agreement on open banking systemBanks agreed to open their payment network to all fintech payment service providers as well as other banks. That would enable customers to use a single application to access their accounts at different banks and make payments. Fees charged on fintech firms for using the network will be lowered to one tenth of the current level to ensure fair competition.► [Phase 2] Legislation on Open BankingThe FSC will propose amendments to the Electronic Financial Transaction Act to provide clear legal grounds for the open banking system. The amended Act will mandate all banks to offer payment service providers with standardize APIs for money transfer. It will also prohibit banks from any discriminatory action against payment service providers using their payment system in processing money transfer and charging fees.► [Phase 3] Fintech firms’ direct access to financial payment systemIn the medium to long term, the FSC will consider allowing qualified fintech payment service providers direct access to
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Feb 11, 2019

FSC to Propose a Bill on P2P Lending

The FSC plans to propose a bill on peer-to-peer (P2P) lending to help the P2P sector grow into one of innovative fintech services and provide both investors and borrowers with better protection.Since P2P lending business in Korea kicked off, the sector has been regulated under flexible guidelines, instead of a legal framework. However, the sector has grown fast in recent years, with P2P lending surging to KRW 5 trillion as of the end of 2018, from KRW 600 billion in 2016. The sector’s rapid growth prompted the need for a legal framework to properly regulate the fast-growing sector and better protect investors and borrowers. Currently, five bills proposed by lawmakers are pending at the National Assembly.Against this backdrop, the FSC held a public hearing today jointly with the Financial Supervisory Service and the Korea Institute of Finance to discuss proposals for new legislation. At the hearing, FSC Chairman Choi Jongku laid out key principles that the new bill on P2P lending needs to pursue:i. It is desirable to establish a separate new legislation for P2P lending business, rather than trying to fit into other existing laws, given the sector’s distinctiveness and innovativeness.ii. New legislation will be designed to seek a right balance between the current market practice developed in the P2P lending sector and regulatory need to prevent risks such as excessive concentration to certain assets.iii. New bill will put emphasis on protection for investors and borrowers, with measures in place to prevent P2P platforms from conflict of interest and moral hazard.iv. New bill will consider scalability and flexibility in designing its regulatory framework, in response to fast-evolving developments in P2P lending market.v. New legislation needs to be backed by the sector’s self-efforts to enhance investor trust.Based on proposals under discussion so far, the FSC will propose a draft bill on P2P lending in March for further reviews and discussions at the National As
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Jan 30, 2019

Korea Next Exchange (KONEX) to be Revitalized

FSC Chairman Choi JongKu announced a plan for revitalizing KONEX at a meeting with young entrepreneurs and venture capital investors. The plan was intended to facilitate fundraising by SMEs venture companies; boost liquidity in the KONEX market; strengthen its role of nurturing SMEs venture companies to help them move to KOSDAQ; and enhance investors’ trust in the KONEX market.BACKGROUNDKONEX was launched in July 2013 as an exchange for SMEs too small to list on the KOSDAQ market. Since then, KONEX achieved a significant growth. Its market capitalization increased almost 13 folds, from KRW 0.5 trillion to KRW 6.3 trillion as of the end of 2018. Over the same period, the number of KONEX-listed companies also increased from 21 to 153. Its daily trading value increased 12 folds, from KRW 390million to KRW 48billion. Despite the growth in size, low liquidity and the lack of price discovery function prompted the need to reform the KONEX market. Against this backdrop, the FSC intends to revitalize the role of KONEX as a springboard for SMEs venture companies to grow further and a platform for venture capital investors to exit and re-invest.Key Changes1. FACILITATING FUNDRAISING THROUGH KONEX► KONEX-listed companies will be allowed to raise funds through crowdfunding, currently limited only to non-listed SMEs, and small public offerings, which will be newly introduced as part of capital market reforms.1► Regulations that cap discount rates on newly-issues shares will be eased for KONEX-listed companies:- (public offering) If an underwriter prices new shares based on demand forecast, new share offerings will be exempted from caps on discount rates.- (third-party allocation) new shares allocated to third-parties will be allowed to offer at a further discount exceeding the current cap of 10%.► External audit standards will be eased or tailored for KONEX-listed companies to reduce their regulatory burdens.1 For further details about ‘small public offerings’, refer
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Jan 21, 2019

Follow-up Measures for Capital Market Reform

FSC Chairman Choi JongKu announced follow-up measures for capital marketreform on his visit to a venture company in the Geomdan Industrial Complex, Incheon. As part of the capital market reform proposal1 announced last November, the follow- up measures include new schemes of introducing a specialized brokerage company to facilitate investment into unlisted securities of SMEs and venture companies; and expanding a pool of professional investors.I. SME-SPECIALIZED BROKERAGE COMPANY TO BE INTRODUCEDThe FSC will introduce a new category of brokerage companies specialized in capital raising business for SMEs venture companies.Scope of businessThe new type of brokerage firms will mainly engage in brokering transactions of private and unlisted securities. They will be also permitted to engage in a broader range of corporate financing for SMEs venture companies – e.g. advisory services for securities issuance and evaluation of corporate value in regard with MAs.However, given that the business involves high investment risks, they will only be allowed to professional investors.Entry requirementTo facilitate the establishment of new specialized brokerage companies, the FSC will lower barriers to entry: newcomers will be allowed to enter the business with registration only, with the minimum capital of KRW500 million and professional workforce of two or more.Applicable regulation investor protectionThe FSC will reduce regulatory requirements, given their limited scope of business and limited impact in financial markets: they will be exempted from prudential regulations – e.g. NCR or leverage ratios; and will be allowed to submit their reports on management and financial performance on a quarterly, not monthly, basis. To protect investors, however, they will be required to have appropriate internal controls which prevent conflict of interest.ScheduleA proposal to amend the Financial Investment Services and Capital Market Act (FSCMA) will be submitted to the National Assembly
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Jan 16, 2019

Fintech Policy Direction for 2019

FSC Chairman Choi JongKu outlined the FSC’s policy priorities for fintech innovation in 2019 at a meeting with fintech entrepreneurs, executives of financial institutions and investors. Chairman Choi said this year would be an opportune time for Korea’s fintech industry to take a step forward, as the groundwork for regulatory, budgetary and institutional support has been laid down. “The FSC will spare no effort to support fintech companies to come with globally competitive services and spread fintech innovation across the financial sector,” said Chairman Choi.Financial Regulatory SandboxThe financial regulatory sandbox, scheduled to be launched in April 2019, will allow fintech companies to test their innovative services with regulatory exemptions for a certain period of time. Preliminary applications for participation will be open in the end of January. The FSC will provide KRW4 billion to support the regulatory sandbox program.Investment in FintechThe FSC will remove regulatory uncertainty that restricts financial companies from investing in fintech companies. In principle, financial companies are prohibited from investing in non-financial companies, except ones closely related to financial services. Currently, financial companies are allowed to invest in fintech companies, based on the FSC’s legal interpretation that fintech falls into a category of businesses closely related financial services. To facilitate investment in fintech, the FSC will amend relevant regulations for clarification on the scope of business in which financial companies are allowed to invest. The FSC will also boost investments by venture capital and PEFs in fintech.Financial Regulatory ReformThe FSC will overhaul formal and informal regulations that hinder fintech innovation. Currently, more than 200 regulations are under review for regulatory reforms. The result of reviews will be announced in the first quarter of 2019. The FSC will also hold a weekly meeting with fintech busines
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Dec 24, 2018

FSC to Approve Additional Online-only Banks

The FSC announced its plans to approve additional online-only banks as the Special Act on the Establishment and Operation of Online-only Banks (hereinafter referred to as ‘Special Act’) takes effect on January 17, 2019. The Special Act allows ICT companies to own a stake of up to 34% in an online-only bank, in an attempt to boost investment and innovation led by ICT companies in the banking sector.The number of newly-granted licenses will be one or two, given the current environment of competition in the banking sector and comparison with overseas trend in the online-banking sector. A study commissioned by the FSC suggested that there is a need to introduce additional online-only banks focused on household loans, which lack competition compared to other businesses in the banking sector.Unlike traditional banks, online-only banks in principle are banned from corporate lending. However, they will be allowed to lend to SMEs.The Financial Supervisory Service (FSS) will start accepting applications for online-only banks in March and grant a preliminary approval to one or two applicants in May 2019.The evaluation of potential candidates will review their funding capability, eligibility for large shareholders, composition of shareholders, and their business plans. Details on evaluation standards will be announced by the FSS in January.* Please refer to the attached PDF for details.
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