The financial authority has decided to allow nonfinancial companies to establish Internet-based banks, which are currently allowed only for stock brokerages, insurance firms and second-tier financial firms, by easing regulations on bank ownership.
Detailed guidelines will be announced in the coming weeks, the Financial Services Commission said Wednesday.
The FSC also unveiled aggressive plans to foster the country’s financial technology industry, a move to create a lucrative melting pot of information technology and finance, dubbed “fintech.”
It plans to ease the legal hindrances that have kept the financial technology business of the tech-driven country, such as unclear legal definitions and ranges for fintech, as well as the capital requirements that are “unreasonably high compared to those in Western countries.”
Fintech is a new type of information technology linked with financial services, ranging from mobile payments such as Kakao Pay and Naver Pay, and remittances to asset management.
Although financial service companies are currently allowed to acquire stakes in or make contributions to companies classified under “the same business” category, the FSC said it would explicitly broaden the category to the fintech industry, which includes developers and operators of finance-related technology and solutions.
The regulator also said it would encourage state-run lenders, such as the Korea Development Bank, the Industrial Bank of Korea and the Korea Technology Finance Corp., to set aside a combined 200 billion won ($184.9 million) for old and new fintech enterprises.
In addition, the commission plans to stipulate legal exceptions to the current law on e-finance that forces the firsthand liabilities of financial accidents to the financial institutions. These financial companies, the FSC said, have been hesitant to adopt the latest fintech solutions for fear of liability for any technological flaws, which are not their area of expertise.
The exception article will ease the burden by splitting the liability between the financial institutions and the fintech firms, the regulator added.
The authority is moving to invigorate crowdfunding to help fund the competitive fintech start-ups. Related policy proposals were submitted to the Legislation and Judiciary Committee of the National Assembly, FSC officials said.
