By Park Ju-hong
Fintech is a new word that comes from the fusion of “financial” and “technology”. Mobile banking and mobile payment technologies, which many people use nowadays, are examples of fintech.
Korea has strengths in the IT field, but it is true that the international competitiveness of the finance sector is inferior to that of the economy overall.
Therefore, the Korean government is supporting the development and growth of fintech.
On November 28, 2017, at a meeting about innovative growth strategies, the Korean government selected fintech as one of “the big eight leading industries of innovative growth.”
The government is beginning to enact a Special Act to Foster Financial Innovation (tentative name). The contents of this bill are expected to include promoting innovative financial services, exempting individual regulations, protecting consumers, simplifying licensing procedures, and granting exclusive operating rights.
It is also believed that the government will take full advantage of the regulatory sandbox, a system that allows exemption and deferral of regulations for a certain time to stimulate innovation.
Companies are leading the Korean financial industry’s development of fintech, but the government plans to promote individual application programming interfaces (API) and Public API (which can be used by anyone) provided by financial institutions to create an environment in which fintech firms can easily develop various financial services.
To achieve these goals, the government is encouraging financial companies to participate in expanding the small number of open API. Also, considering that the security threats such as server hacking or personal information leakage are increasing alongside the development of fintech, the government also intends to manage new risks, including innovative technology security diagnosis and consulting, and to strengthen its financial security response system.
The fourth Industrial Revolution can hardly be achieved by developing just one industry. Fintech will serve as the basis for the proper use of blockchain and cryptocurrency technologies.
Nonetheless, the Korean financial industry is not focusing on fintech development, but exclusively on developing blockchain and cryptocurrency.
The government’s efforts to overcome this limitation and to promote balanced development in each sector will be positive for the market. Also, unlike its attitude to cryptocurrencies, the government has a positive stance toward the general field of fintech.
This situation is an opportunity for the fintech industry, which should actively respond to it during times of rapid change, and should continue to be interested in the contents of newly enacted or revised laws and regulations, so that this opportunity will not be missed.
Park Ju-hong works for HMP Law as a lawyer. His major field is finance and the Fourth Industrial Revolution technology. The thoughts expressed in this column do not necessary reflect those of HMP Law.