FSC Korea published a workplan to support financial innovation and digital finance in South Korea. The key policy tasks under the work plan relate to the advancement of financial technology industry, promotion of online-based financial services, and establishment of digital finance infrastructure. Additionally, Doh Kyu-sang, the Vice Chairman of FSC Korea, held a consultative body meeting on digital finance in February 2021 to discuss ways to improve rules for fintech and bigtech firms and to examine areas for further improvement in the financial regulatory sandbox program. The regulator also announced the issuance of MyData business licenses to several financial institutions, including banks and fintech firms.
Workplan for Financial Innovation and Digital Finance. The following are they key highlights of the digital finance workplan for 2021:
- Advancement of fintech industry. FSC Korea plans to introduce a digital sandbox, from June to August 2021, through which fintech startups can have opportunities to virtually test their new business ideas. In 2021, FSC Korea also intends to establish a comprehensive fintech support system by working on a legislation focused on nurturing fintech firms.
- Promotion of online financial services. In the first half of 2021, FSC Korea intends to promote platform finance to further advance innovation in financial services by encouraging the use of big data analytics and to ensure a stable operation of open banking services for the users of credit card and financial investment services.
- Establishment of digital finance infrastructure. FSC Korea plans to improve rules on data privacy to enhance consumer rights to data ownership and ensure that consumers are thoroughly informed about the risks of data transfer. FSC Korea also intends to set up necessary infrastructures to allow easy access to data convergence using abundance of data stored at financial institutions and across different industries. Additionally, in the third quarter of 2021, FSC Korea plans to draw up measures to promote the development of artificial-intelligence-based financial services by setting up infrastructure for providing support through testbeds.
Meeting on Digital Finance. During this meeting, the FSC Vice Chair highlighted that, in meetings with fintech and bigtech firms, industry officials have suggested seventy-four areas where regulatory reforms are needed. FSC Korea plans to immediately take actions to improve the rules in fifty-two of these areas while another 11 areas are considered as mid- to long-term projects. On the remaining eleven areas where it is deemed to be difficult to seek immediate change at the moment, the authorities will continue to closely monitor the trends to make improvements when conditions become permissible. Doh Kyu-sang also highlighted that FSC Korea will work on a new bill that lays legal grounds for financial institutions investing in fintech firms. The new bill on fintech support will clearly indicate the types of fintech firms in which financial companies can invest, ensure a prompt investment approval process, and allow sanctions exemption. A fintech-financial institution matching platform will also be set up to facilitate smooth cooperation between the financial companies seeking a digital transition and the promising fintech firms with technological prowess. FSC Korea also plans to hold the international fintech expo Korea Fintech Week twice this year and will work for the advancement of open banking system by making it available from more types of financial institutions.
MyData Licenses. In January 2021, FSC Korea granted MyData business licenses to twenty-eight firms, which include include five banks, six credit finance businesses, one financial investment firm, one mutual finance business, one savings bank, and fourteen fintech firms. To ensure a smooth take-off of the MyData services, the authorities will distribute a guideline in February 2021 to specify details about the scope of data transfer, safe means of data transfer, and measures for consumer protection. Beginning in March 2021, FSC Korea plans to begin another round of preliminary application process for those that wish to enter the MyData industry. By law, MyData business operators are required to have a minimum capital of KRW 500 million and adequate telecommunications facilities for safe data processing, while satisfying the major shareholder and feasibility of business plan requirements.
- Press Release on Work Plan
- Press Release on Meeting on Digital Finance
- Press Release on MyData Business Licenses
- Announcement of MyData Plans, May 2020
Keywords: Asia Pacific, Korea, Banking, Digital Finance, Regulatory Sandbox Fintech, Bigtech, Artifical Intelligence, MyData, Open Banking, Work Plan, FSC
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