FSC promotes fintech and innovation in financial services. In order to encourage convergence and collaboration between finance and information technology, FSC launched the financial regulatory sandbox scheme in April 2019, through which more than one hundred ‘innovative financial services’ have been designated. The regulatory sandbox program allows fintechs and start-ups to test out their ideas without worrying about the regulatory impediments. In addition, Korea’s open banking system was fully launched in December 2019, opening up payment networks to both banks and fintechs through a joint network. By creating a financial data exchange platform, fostering MyData industry and opening up extensive sets of public financial data stored at major public institutions, FSC is also working to create an environment where big data and AI can play a larger role in finance. Policies intended to promote innovation also include providing tailored support to the Korean fintech firms to help them grow and scale up as global unicorns by easing regulations, expanding investment and providing assistance for overseas business expansion.
Sep 13, 2021
- FSC Plans to Make Fractional Trading of Domestic and Foreign Stocks More Widely Available
- The FSC announced its plans to make fractional trading of both domestic and foreign stocks more widely available to help improve access and convenience for investors. Background In 2019, the FSC allowed fractional trading of foreign stocks offered by Shinhan Investment and Korea Investment Securities by designating them as innovative financial services to be granted regulatory exemptions under its financial regulatory sandbox program. As a result, by the end of June 2021, the number of fractional stock traders at Shinhan Investment and Korea Investment Securities reached about 140,000 and 510,000, respectively, with their investment amounts standing at KRW270 million and KRW750 million each. However, fractional trading of domestic stocks remained unavailable due to the principle of indivisibility of shares as well as the non-fractional share-based design with which the domestic securities trading and depository infrastructures was set up. To help improve investor access and convenience, the FSC plans to make improvements to the current fractional trading system and make fractional trading of both domestic and foreign stocks available. Key Details Unlike the current system where individual securities firms have to apply for regulatory exemptions to provide fractional trading services, the new system will be based on a special infrastructure set up at Korea Securities Depository (KSD) that is dedicated to fractional trading and can be accessed and used by any securities firms that wish to offer fractional trading services to their customers. This will strengthen the safety and convenience of fractional trading in both domestic and foreign stocks. (Foreign Stocks) Stock trading in fractional shares of foreign stocks will be directly recorded in the securities firms account books. KSD will maintain separate account books on fraction trades and regularly check their consistency with those of securities firms. Investors will be able to trade in fractional shares of foreig
Sep 09, 2021
- Authorities Hold Kick-off Meeting on Designation of Additional Data Specializing Institutions
- The FSC held the first taskforce meeting on the designation of additional data specializing institutions on September 9 as the authorities take into account recent growth in interest and demand for data convergence between financial and non-finance related data. In response to such growth in demand, the financial authorities are planning to designate additional entities as data specializing institutions alongside the four entities already operating in this capacity. In order to prevent excessive competition arising between data specializing institutions, the issue of designating additional entities will be thoroughly reviewed and discussed by experts within the taskforce who specialize in the field of consumer protection and data convergence. The taskforce will operate until October and decide on the basic principles and standards for designating qualified data specializing institutions and establish transparent and objective procedures for designating such entities. Along this line, the authorities are conducting a week-long demand survey. The authorities plan to make a more detailed announcement in October with the selection of additional data specializing institutions expected in the first quarter of next year. * Please refer to the attached PDF for details.
Sep 08, 2021
- FSC Issues 2-YR Extension of Designation on Six ‘Innovative Financial Services’
- The FSC decided to issue 2-year extension of designation on the six previously designated innovative financial services at its 16th regular meeting held on September 8. The innovative financial services selected for two more years in the regulatory sandbox program were those that had been designated on October 2, 2019. The 2-year extension period will be between October 2, 2021 and October 1, 2023. The total number of innovative financial services stands at 153 as of today. Overview of Innovative Financial Services 1) The prepaid rewards points based debit card issuance service by Hana Card 2) The gift card transaction service for financial investment through online e-commerce platforms by Korea Investment Securities 3) The individually tailored pension and asset management platform service by Wealth Guide 4) The facial recognition enabled payment service by Shinhan Card 5) The vishing scam and false wire transfer prevention service by Korea Credit Bureau 6) The credit evaluation service using telecommunications bills and e-commerce data history for small merchants by SK Telecom * Please refer to the attached PDF for details.
Sep 08, 2021
- FSC Grants MyData Business Licenses to More Financial Businesses
- The FSC decided to grant MyData business licenses to five additional financial institutions at its 16th regular meeting held on September 8. Five additional entities were granted final approvals to operate MyData businesses while three more businesses were given preliminary approvals. Industrial Bank of Korea, DGB Daegu Bank, Korea Investment Securities, Kiwoom Securities and LG CNS were given final approvals while Shinhan Investment, NH Investment Securities and KB Securities were given preliminary approvals. The FSC will continue to accept applications for MyData businesses and issue licenses on a rolling basis. * Please refer to the attached PDF for details.
Sep 08, 2021
- FSC Selects 20 Entities to Participate in Digital-Data Testbed Program to Facilitate Fintech Ideas
- The FSC selected 20 entities out of 60 applicants for participation in the digital-data testbed program (D-testbed) in an effort to promote fintechs and facilitate innovative ideas in providing financial services. Between July 28 and August 20, a total of 60 applications have been received for the D-testbed program in the pre-designated areas of (a) financial support for vulnerable groups, (b) credit evaluation advancement and (c) free topics. Out of 45 qualified applicants, the FSC has selected 20 entities to take part in the D-testbed program. The D-testbed program offers fintech startups and prospective entrepreneurs a chance to test out innovative ideas and technologies for their viability, making use of the data made available from the financial industry. The government as well as the public and private sectors have been working together on building large scale data to be made available for use by private sector entities. As such, the D-testbed program provides financial data and the environment for development and analysis to businesses and entrepreneurs that have not had much opportunities for testing their ideas before. The D-testbed program is expected to serve as an important venue for seeking solutions to a variety of issues in financial sectors through collaboration between the government and private sector. The participants will test out their business ideas for 11 weeks between September 27 and December 10 and announce their test results in December this year. For further information, please visit www.dtest.fintech.or.kr. * Please refer to the attached PDF for details.
Jul 29, 2021
- FSC Introduces Revisions to MyData Guidelines
- The financial authorities announced the revised guidelines on MyData services in financial sectors on July 29. The revisions intend to (a) achieve an appropriate balance between consumer convenience and protection over provision of consumer data, (b) draw up measures to protect consumers from excessive competition and (c) establish rules on informed consent to guarantee consumers data privacy rights. In order to provide sufficient time for system tests, the revised guidelines also postpone the standardized API usage requirement from the initially planned date of August 4 to later this year. Revision Details I. Safeguards for 3rd party and other sensitive information The scope of privacy data usage is limited to the user of MyData service and for the purpose of providing analysis services about the user. The usage of privacy data for marketing or other purposes that may raise concerns about privacy violation will be prohibited. II. Informed consent system MyData businesses should establish an informed consent and data transfer system that is suitable for mobile environment and easy to understand for consumers. The guidelines also provide rules on essential consent items, etc. III. Consumer protection from excessive competition MyData businesses should provide a notice about the user guideline before users sign up for their services while refraining from engaging in excessive marketing events. IV. Schedule for standardized API usage (1st Stage) MyData businesses and data providing entities should complete the process of setting up standardized API and carrying out tests by November 30, 2021. (2nd Stage) MyData businesses will begin offering services to consumers through standardized API starting from December 1, 2021. (3rd Stage) MyData businesses will offer services only through standardized API from January 1, 2022. Further Plan The financial authorities will closely monitor and manage the status of API setup at data providing institutions according to the schedule
Jul 28, 2021
- Open Banking Service Availability to be Expanded
- With 23 open banking participating fintechs making available their data about customers prepaid deposit balances for open banking, open banking users will be able to access information about their prepaid deposit accounts from mobile applications of major banks or any other open banking offering financial institutions beginning from July 30, 2021. Open banking has expanded rapidly since its first launch in December 2019 as the cumulative number of subscribers reaching more than 89.7 million with about 166.8 million accounts registered as of July 25, 2021. The FSC has worked on gradually expanding the availability of open banking services from more types of financial institutions. As a result, open banking services are now available from about 110 banks, fintechs, mutual finance firms, savings banks, securities firms, credit card companies and the Korea Post. Along with the account balance inquiry and wire transfer functions as well as checking monthly statements for credit cards that have been already in service, users can now access information about their prepaid deposit accounts from any mobile application of their choosing. The authorities will continue to work for advancement of open banking and seek ways to promote the development of an open finance platform, while continuing to work on ensuring system security. * Please refer to the attached PDF for details.
Jul 22, 2021
- FSC Selects Eight More 'Innovative Financial Services' for Financial Regulatory Sandbox
- The FSC decided to designate eight more financial solutions as innovative financial services at its regular meeting held on July 21. This brings the total number of designated services to 153 since the regulatory sandbox program was first launched on April 1, 2019. Overview of Newly Added Innovative Financial Services 1. A real-name identification and verification service using facial recognition technologies which allows consumers to visit bank branches and use financial services without presenting their ID cards (Daegu Bank, expected in Apr. 2022) 2. A real-name identification and verification service using facial recognition technologies for checking customers personal identification in contactless settings, which will allow customers to open up bank accounts even after the banks regular work hours (Busan Bank, expected in Oct. 2021) 3~5. Online-based telemarketing insurance subscription services using mobile devices that reduce the hassle of reading and recording scripts for insurance telemarketers while still guaranteeing supplemental measures for consumer protection (Toss Insurance, DB Insurance and NongHyup Life Insurance, expected in Oct. 2021, Feb. 2022 and Mar. 2022, respectively) 6~7. QR code enabled credit card payment services which require no physical point-of-service (POS) terminal for businesses to process credit card payments which will help improve convenience for consumers while allowing more small-scale businesses to adopt mobile simply payment methods (Seeroo Information and Paycoq, both expected in H1 2022) 8. A non-recourse accounts receivable factoring service which assumes the risk of buyers failure to honor payment obligations in place of the seller, thereby helping firms with new technologies to raise funds and carry out business operations in a more stable manner (Korea Technology Finance Corporation, expected in Jun. 2022) * Please refer to the attached PDF for details.
Jul 13, 2021
- Authorities to Promote Mutual Cooperation between Insurance and Health Care Industries
- The FSC held the 2nd taskforce meeting on promoting the role of insurers in providing health care-related services on July 13. At the meeting, officials discussed the progress of regulatory reforms as well as areas for further improvements, insurance companies access to public health care data managed by the Health Insurance Review Assessment Service (HIRA) and boosting cooperation between the insurance and health care industries. With regulatory reforms undertaken by the authorities thus far, insurance companies are now allowed to provide health care-related services to general customers, establish a health care or MyData business as a subsidiary and make use of the public health care-related big data managed by HIRA. Continuing with regulatory improvements, the authorities will introduce additional reform measures to allow insurance companies or their subsidiaries to provide platform-based digital health care-related services and to reduce cost and time for business registration. On July 8, 2021, six insurance companies gained approvals for making use of the public health care big data managed by HIRA. In the utilization process, the authorities will ensure that the public data is being used for enhancing convenience and lowering costs for health care users. A consultative body on big data will be set up to manage the safe usage of public health care-related data. The authorities will continue to work on regulatory reforms to promote the role of insurance business in health care-related services while encouraging mutual cooperation between the insurance and health care industries. * Please refer to the attached PDF for details.
Jul 08, 2021
- FSC Introduces Guideline on the Use of Artificial Intelligence in Financial Services
- The FSC held a consultative body meeting on digital finance via teleconference on July 8, chaired by Vice Chairman Doh Kyu-sang, and introduced a guideline on the use of artificial intelligence in financial services to bolster public trust in AI-based financial services and continue to promote innovation in financial industry. All financial and finance-related institutions offering financial transactions and other customer oriented services using AI technologies should follow the guideline which sets forth the least necessary level of standards for AI. Key details of the guideline are as follows. a) (Responsibility) Establishment of three internal control mechanisms, such as adopting ethical principles for AI, designating an internal organization overseeing the entire process of AI-related services and maintaining a risk monitoring and management system for potential risks of privacy breach b) (Accuracy and Safety) Management of the origin and quality of data used for machine learning and establishing a privacy protection system to prevent abuse or misuse of personal financial data c) (Transparency and Fairness) Maintaining a bias control mechanism to prevent discriminatory services against certain consumer groups and pursuing fairness in service provision by establishing and evaluating impartiality standards d) (Consumer Rights) Adequate provision of explanations to financial consumers on AI-based financial services to help consumers better understand and practice their rights e) Equivalent level of safety and security measures applied to AI-based financial services developed and operated by third-party contractors. The authorities plan to begin applying the guideline within this year after a sufficient time for preparatory work. Based on this guideline, financial industry groups will draw up more detailed guidelines tailored to the needs of specific sectors. In the third quarter, the authorities also plan to announce plans for a data library and an AI testbed to c
Jun 29, 2021
- FSC to Promote IP Financing for Young Startup Entrepreneurs
- FSC Secretary General Kim Tae-hyun attended the 3rd intellectual property-backed financing forum held on June 29 and delivered congratulatory remarks underscoring the progress of IP financing and its significance for young startup entrepreneurs. The following is a summary of Secretary General Kims remarks. The governments pursuit of financial innovation has led to remarkable improvements in promoting movable-asset backed financing. The total volume of movable-asset backed financing has surged from about KRW700 billion at the end of 2018 to more than KRW3 trillion within 2 years. In this period, IP-backed financing grew more than fourfold from KRW300 billion to about KRW1.4 trillion. Intellectual property enhances financing opportunities for startups. IP helps to raise companys value and provides a shield against technology theft. It also offers opportunities to attract investments for startups to grow and expand overseas. As such, the FSC has been working to promote IP financing along with relevant institutions in support of young entrepreneurs and startups. First, the government has helped to create an investment fund for IP financing in the amount of KRW500 billion for 2019-2022 to help with the financing needs of innovative firms. Second, the authorities have been working to provide more guarantees through IP financing, offering about KRW300 billion in guarantees to help innovative firms every year. Lastly, the government has been working to boost accessibility for young entrepreneurs in close coordination with startup incubators. Educational programs and other financial support are available for young entrepreneurs and startups through D-Camp and Fintech Center Korea. Todays forum will shed a new light on the importance of IP financing as a means to support young startup entrepreneurs. The FSC will continue to work on promoting IP financing in close cooperation with relevant institutions. * Please refer to the attached PDF for details.
Jun 24, 2021
- FSC Grants Final Approval for Additional MyData Business Entity
- The FSC decided to grant a final approval for MyData business to Aiji Net, an AI-based insurance fintech company at its regular meeting held on June 24. Since its preliminary approval process, the authorities found that Aiji Net has taken steps to bolster organizational structure and set up a team tasked with consumer protection. At the meeting, the FSC also granted preliminary approval for six out of seven entities including Daegu Bank, Jeonbuk Bank, KB Capital, Kyobo Life Insurance, Shinhan Life Insurance and KB Insurance. The addition of three insurance companies that have passed the preliminary approval stage is expected to help diversify MyData service areas. The FSC will continue to process new applications for MyData businesses every month and promptly carry out the application review and approval process. * Please refer to the attached PDF for details.
Jun 24, 2021
- 2021 Korea Fintech Week Brings About Tangible Outcome for Fintech Advancement
- The 2021 Korea Fintech Week has attracted about 250,000 online visitors so far since its opening on May 26. The offline to online availability of diverse opportunities for exhibition, education, investment and employment has provided important venues for fintechs, financial companies, relevant institutions and individuals seeking jobs in the industry. Through offline IR events and virtual meetings, 29 fintechs were able to attract investments in the amount of about KRW133.7 billion. A total of 54 fintechs, financial companies and relevant institutions participated in the online job fair through which up to 175 individuals will be given job opportunities in fintech or finance sectors. In this years event, 39 foreign-based fintechs, financial companies and investors from 13 different countries participated in online exhibitions, which provided opportunities for global cooperation and overseas expansion. The Korea Fintech Week also featured many expert speakers providing latest trends in the global fintech industry and relevant policy issues. * Please refer to the attached PDF for details.
Jun 17, 2021
- One-stop Credit Card Reward Points Redemption Service to be Available from Payinfo.or.kr
- The FSC announced that the one-stop credit card reward points redemption service will also be available from the Account Info website (www.payinfo.or.kr) starting from June 17. As the reward points redemption service became available on January 5 this year through the Account Info mobile application, the total amount of reward points that have been redeemed by users reached more than KRW200 billion in just about four months. In order to make this service more accessible to a wider range of groups including non-mobile users, a general web-based service will also be launched on June 17 at payinfo.or.kr.As such, the reward points redemption service will be accessible from personal computers as well as mobile devices. As of the end of May 2021, KRW203.4 billion in credit card reward points have been redeemed with the total number of applications standing at about 179.9 billion cases. In addition, the total amount of money that has been withdrawn from inactive or dormant accounts using the Account Info mobile app reached KRW18.21 billion at the end of May. In total, some KRW221.6 billion in credit card reward points and dormant/inactive account funds has been claimed by financial consumers. The authorities will continue to work on improving convenience for financial consumers. * Please refer to the attached PDF for details.
Jun 16, 2021
- Authorities to Upgrade and Simplify Unclaimed Insurance Benefits Process
- The FSC announced that the authorities are working on upgrading and simplifying the process of finding unclaimed insurance benefits with a goal to finish up upgrading the system by the third quarter of this year. When system upgrades become ready, insurance beneficiaries can search for unclaimed or dormant insurance benefits and make claims for disbursements at once on the same website (http://cont.insure.or.kr). The unclaimed insurance funds search website was launched in December 2017 to help beneficiaries find their unclaimed insurance benefits more easily. The FSC has also carried out a campaign to help more beneficiaries get disbursements by sending out letters to all insurance holders with unclaimed benefits since the end of 2017. As a result, the number and the amount of disbursements has increased significantly. In 2020, about KRW3.3 trillion in disbursements has been made out in more than 1.35 million cases. In 2021, the cumulative amount of disbursements has already reached KRW1.4 trillion in about 495,000 cases by the end of April. As there still exists about KRW12.6 trillion in unclaimed insurance funds, the authorities will continue to work on informing beneficiaries about their unclaimed benefits while making improvements to the unclaimed insurance funds search website. * Please refer to the attached PDF for details.
Jun 10, 2021
- FSC Grants Preliminary Approval for Kakao Pay's Digital Insurance Business
- The FSC decided to grant preliminary approval for Kakao Pays digital insurance business at its 11th regular meeting held on June 9. The authorities decided that Kakao Insurance has met all necessary requirements under the Insurance Business Act for the operation of an insurance business. This is the first time that the FSC is granting preliminary approval for digital insurance business to a new entrant (non-insurer). The FSC expects that Kakao Insurance can help improve consumer convenience and promote competition and innovation in the insurance industry by launching insurance products linked to digital technologies and platform services offered by Kakao. The addition of Kakao Insurance will also have a positive impact on promoting the overall non-life insurance market. Kakao Insurance can apply for the final approval from the FSC within six months from now after taking steps to meet the capital, human resources and infrastructure and facility requirements set forth by the relevant law. * Please refer to the attached PDF for details.
Jun 09, 2021
- FSC Grants Toss Bank Final Approval to Operate Digital Banking Business
- The FSC decided to grant final approval for Toss Bank at its 11th regular meeting held on June 9. Toss Bank will begin its digital banking operation as soon as September this year after completing necessary preparatory works. Toss Bank is the third digital bank that will be launched in Korea after K Bank and Kakao Bank that gained approval from the FSC in December 2016 and April 2017, respectively. After a close examination on the entry requirements, the authorities found that Toss Bank has met all requirements needed to gain a final approval. However, in order to ensure a seamless progress for its business growth, the authorities introduced a condition that Toss Bank closely follow up with its capital increase plan until 2025. FSC Chairman Eun Sung-soo stated that the new digital banks addition to digital banking industry will help broaden consumer choice and increase competition and innovation in the financial industry. Toss Bank is expected to begin its operation as early as in September this year. The FSC and FSS will operate an on-site support team to ensure a smooth takeoff of the new digital bank. * Please refer to the attached PDF for details.
May 31, 2021
- Tech Financing from Banking Sector Continues to Rise for Innovative SMEs
- The FSC announced the tech financing performance of banks for the second half of 2020. Among large-sized banks, the IBK and KEB Hana bank raked high, while Kyongnam and Busan Banks showed outstanding records among small-sized banks. The result of banks tech assessment capability also shows that the total number of banks that have completed setting up their own tech credit evaluation systems and are fully capable of extending loans based on their own tech credit assessment also increased to nine as one more bank joined the rank. Tech financing has become an important channel to raise funds for innovative SMEs that have technological prowess and future growth potential. Since its introduction in January 2014, the outstanding balance of tech financing loans continued to rise to KRW266.9 trillion as of the end of 2020.With active participation from the banking sector, tech financing has become widely in use. More recently, tech financing has moved into intellectual property and movable asset-based lendingas well. The authorities plan to work on making improvements to the tech financing system to continue to provide support for innovative SMEs. To improve consistency and credibility of tech credit evaluation systems between banks and TCBs, the authorities will help establish a standardized tech evaluation model during the second half of this year. The authorities also plan to gradually phase in tech credit evaluation into a comprehensive credit rating model for businesses. * Please refer to the attached PDF for details.
May 31, 2021
- Open Banking Available from Credit Card Companies
- The FSC announced that open banking service will be available from mobile applications of major credit card companies starting from May 31. Shinhan, KB Kookmin, Woori card companies will make their open banking services available from May 31, with Lotte, Samsung, Hyundai and Hana card companies expected to join from June to August this year. Open banking was launched in December 2019 and has become widely in use. It has attracted some 80.2 million users cumulatively with more than 146.6 million accounts registered as of May 24, 2021. With credit card companies now offering open banking services, consumers are able to check their account balances and make mobile money transfers by using mobile applications of credit card companies while checking their monthly credit card usage on a banking application. Credit card companies will need to offer a more integrated financial service platform that provides the function of balance inquiry and mobile money transfer beyond their traditional payment-related services. In a similar vein, banks will now be able to develop a more customer-oriented business model that offers analysis on spending patterns, etc. Beyond open banking, the FSC will pursue open finance, a mutual opening up of finance-related services by financial sectors and fintechs through standardized mechanisms. The authorities will continue to work on making improvements to open banking by exploring potential links to new services and other industries and seeking ways to expand open banking services and its functions. * Please refer to the attached PDF for details.
May 26, 2021
- FSC Plans to Improve Rules to Promote Big Data Analytics in Financial Sectors
- The FSC announced its plan for improving rules on data convergence of anonymized and pseudonymized data in financial sectors on May 26 with an aim to further promote big data analytics in financial sectors. With the revised Credit Information Use and Protection Act taking effect on August 5, 2020, data convergence through big data analytics became possible through one of the four government-designated data specializing institutions. As of May 25, 2021, 41 cases of data convergence have been completed on 111 pieces of data by data specializing institutions. A total of 46 financial and non-financial companies have participated by providing their data and 35 companies have received the converged data for analysis and use. The converged data are being used for developing more convenient financial services for diverse types of consumers, introducing new technologies and services and more closely analyzing policy outcomes and improving policies. Against this backdrop, the FSC plans to work on the following measures to further advance big data analytics in financial sectors. Key Measures First, the FSC plans to increase the number of designated institutions that specialize in data convergence in the second half of this year to make it possible the provision of more specialized data convergence services and open up more types of data from businesses and public institutions. Second, the FSC plans to ease some of the restrictions placed on data convergence between a data specializing institution and a third party entity. Currently, data convergence between data stored at a data specializing institution and that provided by a third party is only permitted when the converged data is for use by a third party under the condition that there is no potential conflict of interests in using the converged data. The FSC plans to ease this restriction to allow data convergence and use by the same entity in a way that still prevents conflicts of interests. Third, the Credit Information Us