The South Korean government is gearing up to boost the financial industry, which is a slump, by bolstering the use of information technology in financial services, or “fintech,” according to the government and industry watchers.
There are plans to unveil a policy to stimulate the development of financial technologies this month, Financial Services Commission’s chief Shin Je-yoon said Thursday.
“The government plans to shift its regulation paradigm since global tech giants such as Alibaba, Google and Apple are muscling into the financial market with technology-driven diverse services ranging from money transfer to investment brokerage,” Shin said in his New Year’s address.
Most of the local financial groups’ chiefs shared similar views in their New Year’s messages, stressing the need to take advantage of new technologies in the industry.
South Korea, which boasts of top-notch technologies, is still lagging far behind other nations such as the United States and China in terms of the financial technology industry due to its stiff regulations.
This year, the government has vowed to grow the fintech sector by easing regulations in a bid to stimulate the weakening industry.
“In order for online banks to work, the government first needs to deal with a real-name system and the strict separation of commerce and banking, both of which need public consensus,” said Kang Seo-jin, a researcher at KB Financial Group’s research center.
Under the current rule on a real-name system, users must visit banks or financial institutions and offer identification credentials in order to open bank accounts. The FSC is reportedly considering easing regulations on a real-name system, to allow tech companies to set up online banks easily.
Furthermore, the government is also planning to relax the rules regarding strict separation of commerce and banking services, which makes it difficult for tech firms to jump into the financial industry.
Currently, industrial companies are able to hold only 4 percent of a bank’s shares. Financial authorities are now reviewing an exception clause to allow tech companies to hold more than 4 percent of a bank’ shares while limiting some activities such as business loans.
By Shin Ji-hye (
shinjh@heraldcorp.com)
