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.
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Aug 13, 2020
- Green Finance Task Force Holds Kick-off Meeting
- Vice Chairman Sohn Byungdoo presided over a kick-off meeting of the green finance task force on August 13. The task force will work to establish a monitoring system for financial risks emanating from climate change, boost investment in green industries and consider the possibility of joining international networks on green finance.The following is a summary of Vice Chairman Sohn’s remarks.(GREEN SWAN) In January this year, the BIS introduced the concept of the ‘Green Swan,’ warning about the possibility of financial crisis caused by climate change. In the BIS report, the threat of climate change is characterized by unpredictability, severe ripple effects and extensive negative externalities. As such, major countries and international organizations have come to understand the threat of climate change to the financial sector. In July 2017, the FSB Task Force on Climate-related Financial Disclosures made recommendations to help companies disclose climate-related financial risks, and in December of the same year, the Network for Greening the Financial System was launched by central banks and regulators from major economies.(PROACTIVE MANAGEMENT) Climate change can threaten the stability of the financial system in many different ways. There are physical risks that financial institutions may face as physical damages caused by climate change can have ripple effects through insurance, loans and investment. In addition, there are transition risks that can have negative effects on the stability of the financial system as a transition to low carbon economy can lead to an abrupt fall of carbon intensive industries. In this regard, the government will strengthen its efforts to monitor and identify climate change risks to maintain stability in the financial system.Financial institutions should also consider taking into account the environmental, social and governance factors alongside the traditional risk factors such as credit or liquidity risks for their asset management.
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Aug 06, 2020
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Jul 31, 2020
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Jul 30, 2020
- FSC Chairman Speaks about Innovation at Mapo Front 1 Opening Ceremony
- FSC Chairman Eun Sung-soo delivered congratulatory remarks at the opening ceremony of the Mapo Front 1, the government-backed start-up incubating facility on July 30. The following is a summary of Chairman Eun’s remarks.With the COVID-19 pandemic situation continuing for about six months, start-ups faced challenges amid continuing instability and uncertainty. However, as the country recovers from the pandemic-induced economic crisis, new opportunities will be provided to innovative start-ups. The government’s digital and green new deal initiative announced on July 14 aims to set the stage in that regard.In order to foster an ecosystem for innovative start-ups and to support innovative changes in our economic structure, it is necessary to establish a strong support system. The Mapo Front 1, which is the world’s largest start-up incubating facility, provides such a framework. The facility provides a comprehensive support package ranging from financial support to educational programs to living spaces to overseas business expansion opportunities, which has been made possible by participation and cooperation of both the public and private sectors, including the financial industry, international organizations, local governments and large companies.The Mapo Front 1 will be housing about 90 innovative start-ups this year with an aim to provide incubating programs to up to 2,700 start-ups over the next five years and create about 18,000 new jobs.In order to provide continuous support after the start-up stage, the government has made available a scale-up fund worth about KRW15 trillion over a five-year period (2018-2022).In addition, the government has announced its plans to provide targeted support to one thousand innovative firms over the next three years, through which selected start-ups will be able to receive a variety of funding opportunities.Through these and other support programs, the government will continue to work to create an environment in which innovative
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Jul 28, 2020
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Jul 27, 2020
- FSC Announces Plans to Promote Digital Finance
- The FSC unveiled its plans to promote digital finance on July 24, focusing on improving regulations for the industry, ensuring strong protection for digital finance users, building foundations and infrastructure to facilitate large volumes of digital financial transactions and strengthening data security to ensure stability in the financial system.BACKGROUNDDigital finance as a major ‘untact’ industry has grown significantly with the development of simple payment and money transfer services, authentication technologies and platform businesses. With the introduction of new technologies and the expanded use of e-commerce and telecommuting, digital transformation of the financial industry has been accelerated. The convergence of digital finance with ICT sectors and platform businesses will not only lead the transformation toward a digital economy but also help enhance financial inclusiveness.Recognizing the significance of digital finance, major economies have made changes to their regulatory framework to promote competition and innovation. Meanwhile, the Electronic Financial Transactions Act in Korea has not seen major updates since it was first enacted in 2006. As such, the current regulatory framework cannot fully accommodate the changes taking place in the financial industry which pose the following obstacles—a) relatively high entrance barriers for innovative electronic financial business entities, b) lack of strong user protection measures to guarantee safety in digital transactions and earn consumer trust, c) need for new infrastructure fit for new financial environment, and d) need to ensure financial data security.With the revisions to the Electronic Financial Transactions Act, the FSC will boost both convenience and safety of digital finance users, promote innovation and competition in the financial industry, and contribute to the government’s digital new deal initiative.KEY POLICY AGENDAI. PROMOTE GROWTH OF INNOVATIVE DIGITAL FINANCE PLAYERS (INDUSTR
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Jul 23, 2020
- FSC Adds 4 More 'Innovative Financial Services' to Regulatory Sandbox
- The FSC added four more ‘innovative financial services’ to the regulatory sandbox on July 23, bringing the total number of designated services to 110 since the sandbox program was first launched on April 1, 2019.In order to support digital transformation and promote the government’s new deal initiative, during the second half of this year, the FSC will begin to accept applications on a rolling basis with a particular focus given to new technologies such as big data, AI, digital authentication, payment, data security, etc. Interested firms may apply online throughout the year. OVERVIEW OF NEWLY ADDED ‘INNOVATIVE FINANCIAL SERVICES’1. An intellectual property rights based investment and fund raising mechanism that allows SMEs to raise funds with IP rights through trust companies and recruit investors through a crowdfunding platform (Hana Bank Wadiz, expected launch in January 2021)2. A mobile-based comprehensive retirement pension advising service that analyzes individuals’ multiple pension accounts and offers advises on pension products (Doomoolmori, expected launch in December 2020)3. An online financial investment platform that conveniently allows investors to purchase coupons for purchasing investment products on securities exchange platforms (KB Securities, expected launch in February 2021)4. A data analysis service using homomorphic encryption, which makes possible the coding of personal financial information stored in different financial institutions for analyzing purposes (Korea Credit Bureau, expected launch in august 2020) * Please refer to the attached PDF for details.
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Jul 21, 2020
- FSC Chairman Holds Talks with Officials from Financial Companies, Big Techs and Fintechs
- FSC Chairman Eun Sung-soo met with officials from financial institutions, big techs and fintechs as well as academia on July 21, and held talks on ways to promote the advancement of Korea’s financial industry.The following is a summary of Chairman Eun’s remarks.The digital transformation taking place in the financial companies, big techs entering the financial services industry and the growth of fintechs are all expected to bring about change and innovation in our financial industry. As such, the traditional financial companies, big techs and fintechs should build mutual understanding and cooperative relations with each other.Big tech companies should always adhere to the principle of fair competition while respecting the regulations and the system built upon the existing framework of financial laws. Both big techs and fintechs should work to ensure financial data security and consumer protection while working to prevent conflict of interests with their nonfinancial service functions.The traditional financial companies should focus on improving consumer convenience and developing innovative ways to provide financial services. The government will support their efforts for innovation. On the issues concerning fair competition or regulatory arbitrage, the government is always willing to listen to constructive opinions and suggestions for solution.To level the playing field in the financial industry, the government will build foundations for fair competition by implementing fair and reasonable regulations, such as the financial regulatory sandbox program, while working for a balanced development between financial innovation, consumer protection, financial information security and data protection.The FSC will set up a joint public-private consultative body composed of officials and experts from the government, financial institutions, fintechs and big techs in the third quarter this year. The joint consultative body will discuss diverse issues including regulatory ref
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Jul 20, 2020
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Jul 16, 2020
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Jul 13, 2020
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Jul 09, 2020
- FSC Chairman Speaks about Promoting Artificial Intelligence in Financial Industry
- FSC Chairman Eun Sung-soo visited the Korea Insurance Development Institute’s automobile technology research center in Icheon-si, Gyeonggi-do on July 9 to see the application of artificial intelligence in auto insurance, and held talks on the topic of the insurance industry in the 4th industrial revolution and post-pandemic era.The following is a summary of Chairman Eun’s remarks.With the 4th industrial revolution, technological innovation is rapidly taking place throughout the world. The financial industry is also experiencing changes in its structure and terrain. In a post-pandemic era, this changing trend, such as digitalization of the economy and development of untact services, is expected to accelerate even further.The insurance industry has diverse channels through which it provides services to consumers, and is closely connected to different industries, which is why it has a high potential for convergence with innovative technologies. In this regard, the AI-based auto damage appraisal service is an excellent example of technological convergence in the insurance industry.The FSC will set up a working group to draw up plans to promote AI in the financial sectors, which will focus on improving regulations, building infrastructure and ensuring consumer protection.In order to ensure a continuous growth of the insurance industry, different attempts and tryouts for innovation and adapting to changes should be highly encouraged.The FSC will strongly support the insurance industry’s efforts at innovation through its regulatory sandbox program and continuous efforts to improve regulations.* Please refer to the attached PDF for details.
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Jul 07, 2020
- FSC Chairman Underscores Balance between Financial Innovation and Data Security
- FSC Chairman Eun Sung-soo attended a seminar held by the Financial Security Institute commemorating the day of information protection on July 7 and delivered a keynote address underscoring the importance of maintaining a balance between financial innovation and data security.The following is a summary of Chairman Eun’s remarks.(DIGITAL FINANCE) The COVID-19 pandemic has accelerated the trend for contact-less financial services and digital transformation amid the 4th industrial revolution. Consumer preference for online transactions, such as mobile-based simple money transfer or payment methods, has increased as well as the frequency of telecommuting and teleconferencing by financial institutions. The government has been actively pursuing policies to promote innovation in the financial sectors. As a result, a total of 106 ‘innovative financial services’ have been designated through the regulatory sandbox program. As open banking became fully operational in December last year, more than seven of ten economically active individuals now use open banking, and the number of account views and transfers reached more than a billion. Moreover, the revisions to the three major data-related laws including the Credit Information Act will go into effect on August 5.(NEW CHALLENGES) Innovation in digital finance poses new challenges. Unlawful activities, such as identity theft or vishing, can lead to financial crimes. With a growing number of big techs and other nonfinancial institutions playing bigger roles in the provision of financial services, the third party risk originating from nonfinancial sectors has increased. The scope of cyber threats has also become wider with the application of newly available digital technologies. In this regard, without a guarantee for the safe protection of personal wealth and identity, innovation in digital finance is nothing more than a house of cards.(BALANCE BETWEEN INNOVATION SECURITY) In order to maintain an appropriate balance between
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Jul 06, 2020
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Jul 02, 2020
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Jul 01, 2020
- FSC Announces Plans to Further Promote Use of Big Data in Finance
- The FSC announced its plans to make financial big data more widely available on July 1, which include making improvements to the Korea Credit Information Services’ CreDB system and newly creating an open big data system at the Korea Financial Telecommunications Clearings Institute.BACKGROUNDData is considered as an essential commodity in digital economy, and opening up large sets of data stored at public institutions to be utilized by companies is crucial. In this regard, the FSC has been building the necessary big data infrastructure to facilitate the opening up, distribution and convergence of data through following stages.(CREDB SYSTEM) Personal and business credit information system called CreDB was established at the Korea Credit Information Services, offering financial data to financial companies, enterprises and academia beginning on June 3, 2019.(FINANCIAL DATA EXCHANGE) Financial data exchange was launched on May 11, 2020, providing a one-stop data search, transaction and distribution service.(OPENING UP PUBLIC FINANCIAL DATA) About 44.5 million pieces of public financial data stored at the FSC and nine other public financial institutions have been opened up to the private sector enterprises on June 9, 2020.(DESIGNATING DATA SPECIALIZING INSTITUTION) To ensure safety and security in the data convergence process, data specializing institutions will be designated in August 2020.IMPROVEMENTS TO CREDBDue to a rise in demand, the CreDB system needs to be improved to (a) make more types of data sets available, (b) improve server capacity to make deep learning and other types of more sophisticated data analysis possible and (c) make cross-convergence and analysis possible between the CreDB data and other types of nonfinancial data.(DATA SETS) Introduce insurance database (from July 1), user tailored database (from H2 2020) and educational database (from July 1) to be newly added to the CreDB(SERVER CAPACITY) Boost the current server capacity in H2 2020 to enable
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Jun 29, 2020
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Jun 23, 2020
- FSC Chairman Highlights Importance of Building Mutual Trust between Start-ups and Investors
- FSC Chairman Eun Sung-soo attended the global start-up conference NextRise 2020 on June 23 in Seoul, and delivered congratulatory remarks. During his speech, Chairman Eun explained the government’s policy to promote innovation in financial services while encouraging start-up entrepreneurs.The following is a summary of Chairman Eun’s remarks.(START-UP ENVIRONMENT) Despite unexpected difficulties and uncertainties caused by the COVID-19, the changing economic conditions provide challenges as well as new opportunities. We may be able to seize new opportunities if we are well prepared for the post-pandemic world and changing global economic conditions.(INNOVATION IN FINANCIAL SERVICES) The government is pursuing diverse strategies to change our economy from a ‘chaser’ to a ‘leader.’ In finance, the government will focus on promoting innovative financial services to help support companies. Working with other ministries, the FSC will select about 200 innovative firms to provide targeted financial assistance. To support innovative firms at their growth stage, the government will work to expand the scale-up fund from KRW8 trillion to KRW15 trillion by 2022. To promote crowdfunding as an important financing channel for start-ups, the government will allow start-ups as well as SMEs to issue securities to raise funds and expand the annual issuance cap from KRW1.5 billion to KRW3 billion. The government-backed start-up incubating center Mapo Front1 will become operational next month. During the second half of this year, the government will work on improving the business credit evaluation system.(BUILDING MUTUAL TRUST) Aside from government policies, building mutual trust is important between businesses and investors. Innovative ideas and technological prowess should earn trust from investors. Similarly, investors and lending institutions should build trust from the market through transparent management of capital.* Please refer to the attached PDF for details.
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Jun 16, 2020
- Plans to Promote Crowdfunding
- FSC Chairman Eun Sung-soo held a meeting with relevant officials from the public and private sectors on June 16 and unveiled the government’s plans to promote crowdfunding.CHAIRMAN’S REMARKSOver the past four years, many firms, agencies and investors have joined efforts to promote venture capital market through crowdfunding. As the term “crowdfunding” has its origins in “crowdsourcing,” it is distinct from other investment methods using the “wisdom of crowd.” As there have been many successful crowdfunding cases, the role of crowdfunding as an “untact” fundraising and investment mechanism is expected to grow in the future.In this regard, the FSC has prepared specific plans to promote crowdfunding to support the growth of innovative start-ups and SMEs through venture capitals and strengthen foundations to foster an ecosystem for innovative solutions in financial services.The changes in our work environment and lifestyles brought about by the COVID-19 pandemic, such as telecommuting and online shopping, may present opportunities for innovative firms. In order to sustain further development of crowdfunding, trust building is important. Therefore, fostering a trustworthy crowdfunding market requires a high degree of responsibility from crowdfunding intermediaries and other relevant institutions.KEY MEASURESAs the crowdfunding system is transitioning from an adoption period to a take-off stage, the government will work to (a) bolster its role of supporting innovative firms by improving the rules for businesses, investors and intermediaries and (b) create an accountable investment market through an expansion of support from policy banks and investor protection measures.I. EXPANDING THE SCOPE OF ISSUERS AND LIMIT ON CAPITAL RAISE(a) The scope of issuers will be expanded from non-listed start-ups and venture companies to non-listed small- and medium-sized enterprises.(b) The annual cap on issuing securities will be raised from KRW1.5 billion to KRW3 bill
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Jun 09, 2020
- Preliminary Application Opens for Designation of Data Specializing Institution
- The FSC announced on June 9 that the preliminary application for the designation of data specializing institution will be open from June 10 to 24.The revised Credit Information Act, which is scheduled to go into effect on August 5, incorporates the concept of anonymized and pseudonymized data and authorizes the government designated data specializing institution to perform convergence of pseudonymized data originating from different businesses. The data specializing institution will also test the appropriateness of anonymized data upon requests.REQUIREMENTSApplying entities should (a) be non-profit or public institutions, (b) have eight or more specialists in the field of data or information security as well as legal professionals, with its board members having no recent record of violating either the Personal Information Protection Act or the Credit Information Act, (c) have set up data processing, IT and information security facilities suitable for data convergence, (d) have total debt within 200 percent of net assets, and (e) have risk management and internal control mechanisms for the purpose of identity protection with its mission and business area appropriate for performing the tasks of a data specializing institution.OPERATIONAL GUIDELINESWhile maintaining the right balance between data protection and data utilization, a streamlined and secure process for data convergence will be put in place. Also, rigorous security standards will be established in order to prevent data leakage and re-identification.The appropriateness test for anonymized data will go through an objective and efficient process by a review committee of experts.SCHEDULEThe designation of data specializing institution will be announced within August after a review of preliminary applications in July and registration on August 5.* Please refer to the attached PDF for details.
