South Korea Lays Out 24 Key Focus to Scale up Fintechby Fintech News Hong Kong December 9, 2019
The FSC announced measures to promote fintech scale-ups on December 4, which includes 24 key tasks in 8 different policy areas.
The government has been promoting the fintech industry as part of its innovation-led growth strategy amid digital transformation and the 4th industrial revolution.
To this end, the government has introduced a financial regulatory sandbox, open banking, regulatory reforms and budget earmarks for fintech. In order to further develop Korea’s fintech industry and its ecosystem, the government plans to implement the following fintech scale-up strategy, which builds upon the progress made so far.
Improving The Current Regulatory Sandbox System
- Designate more than 100 ‘innovative financial services by the end of March 2020, which marks the one-year anniversary of launching the regulatory sandbox
- Ensure that innovative ideas and technologies are properly protected through patents by providing legal counsel or through cooperation with the Korea Intellectual Property Office, while requesting additional requirements within a boundary that does not impose strain on fintech firms
- Provide continuous support to fintech firms after their designation of innovative financial services’using the 2019 budget earmarked for fintech(KRW10.1 billion),and set up a fintech-specific supervisory system.
Performing Regulatory Reforms To Facilitate Fintech Development
- Promote a flexible and dynamic regulatory environment where a testing of ‘innovative financial services can generate tangible improvement in the overall regulatory framework
- Work on regulatory reforms tailored to the needs of foreign fintech firms to facilitate their entry into the Korean market
- Continue to modify and improve regulations while closely communicating with innovative firms on the field to account for ongoing changes and trends in the fintech industry
Lowering Entry Barriers To Financial Industry
- Extend the regulatory exemption period in the case that relevant regulations have not been modified prior to the expiration of the testing period
- Introduce a provisional licensing system appropriate for fintech firms based on the type and size of the firm, such as a‘small license,’ with which fintech firms may continue to operate and provide relevant services
- Establish a new licensing and registration system after reviewing the performance of the provisional licensing system, and subdivide licensing units to facilitate the development of new financial services and their entry to the market
Establishing Regulatory Foundations For Digital Era
- Promote electronic payment services, such as ‘My Payment’, which provides lower transaction fees and simpler transaction procedures, and improve regulations on simple payment services
- Provide a legal framework that allows the use of newly emerging authentication methods, such as biometrics, decentralized ID (DID), etc.
- Improve financial stability by introducing protective measures which requires-payment service providers to safely manage user funds in external institutions, and by strengthening the preparedness for cybersecurity risks in financial sectors
Developing New Growth Engines For Financial Innovation
- Continue to implement innovative initiatives in e-payment infrastructure through open banking system, which is scheduled to be launched on December 18, and work on strengthening the system stability and security as well as consumer protection
- Modify relevant laws, infrastructure and regulations to promote the use of big data in financial sectors through a revision of the Credit Information Use and Protection Act,and furthering the development of big data infrastructure, such as the financial big data open system ‘CreDB,’data exchange platform and institutions specializing in big data(e.g.Korea Credit Information Services and Financial Security Institute)
- Promote the development of new fintech-based innovative services, such as P2P lending and artificial intelligence
Promoting Investment In Fintech And Fostering an Ecosystem For Venture Capital Centers on Private Sector Investment
The government will provide fintech firms with funding opportunities at different stages of their business cycle.
- Enhance cooperation between financial institutions and fintech firms by expanding the scope of fintech sectors that can receive investment from financial institutions and encouraging internalization of fintech firms by financial institutions
- Increase funding sources for fintech by providing Fintech Innovation Fundworth KRW300 billion over a 4-year period and through policy funds worth KRW3.35 trillion over a 3-year period. Modify KOSDAQ listing requirements to facilitate fintech IPOs
Assisting Fintech Firms With Overseas Expansion
- Promote trilateral cooperation between the government, financial institutions and fintech firms
- Launch more than fintech labs in ASEAN countries by 2020 to give overseas expansion opportunities for both Korean financial companies and fintech firms
- Expand inter-governmental cooperation to support fintech firms’overseas expansion in each others countries, and maintain close communication to share information on fintech market trends, relevant regulations and policy experiences on financial innovation
Expanding Public Sector Support For Fintech Firms
In order to improve fintech firms chances for success, the government will expand support through budgetary means and tax benefits, and through the enhanced role of the Korea Fintech Center.