Introducing Digital Sandbox and Enacting Fintech Promotion Support Act

Detailed Tasks for Digital Finance Innovation by the Financial Services Commission

[Asia Economy Reporter Park Sun-mi] To accelerate the fostering of fintech, the functions and capabilities of the financial regulatory sandbox operation department will be expanded within the first quarter, and the Fintech Promotion Support Act will be established within the year. A safe non-face-to-face authentication and identity verification system to activate non-face-to-face financial services will also be established within the first half of the year.

The detailed tasks for digital financial innovation recently disclosed by the Financial Services Commission focus on three main areas: accelerating fintech promotion, activating non-face-to-face finance, and building financial infrastructure to support digital innovation.

First, to accelerate fintech promotion, the functions and capabilities of the financial regulatory sandbox operation department will be expanded within the first quarter. The FSC will work on digital sandbox policy establishment (system design, seeking joint public-private solutions), review regulatory improvements through new channels such as the digital finance council, and continuously improve the financial regulatory sandbox system and operation methods. Strengthening functions and capabilities, including expanding personnel in the sandbox team under the FSC’s jurisdiction, is also being considered.

The Financial Supervisory Service (FSS) will be responsible for continuous supervision of innovative financial service providers, monitoring consumer and market impact, and achievement of performance indicators. The FSS is also expected to consider increasing support personnel in response to the continuous expansion of innovative financial service providers.

The digital sandbox will also be promoted in the first half of the year.

This is based on the judgment that early-stage fintech startups need opportunities for pilot testing to verify the innovativeness and business feasibility of new ideas before full-scale commercialization. The financial regulatory sandbox provides regulatory exemptions based on actual commercialization, reflecting the limitation that it is difficult to verify various ideas considering market impact.

Participating companies for the digital sandbox will be selected within the first half of the year, and testing will be conducted between June and August. After the test is completed, ▲notification of test results on participating companies’ technology and business ▲discussion of joint solutions for policy tasks ▲and supplementation of the digital sandbox system will be carried out.

A bill to promote comprehensive and systematic fostering of fintech will also be prepared within this year.

It will focus on establishing institutional measures to promote fintech investment in the financial sector, providing comprehensive support grounds for the fintech industry, and setting regulations to create a fair competitive environment in the fintech industry.

To activate non-face-to-face finance, a plan to revitalize platform finance will be prepared within the first half of the year.

The main content includes various institutional improvements to ensure that big data and data analysis capabilities owned by platforms are sufficiently utilized in small business loans and non-face-to-face financial services. For example, efforts will be made to actively use big data such as non-financial information owned by platforms for credit evaluation and other financial services, and to support the linkage of commercial sales information from public institutions to financial services through data analysis by platform companies. Related regulations will also be revised to ensure smooth provision of financial services through platforms.

Additionally, a convenient and safe non-face-to-face authentication and identity verification system will be established within the first half of the year. There has been strong demand for the authentication and identity verification system to be improved so that financial users can conveniently and safely use financial services in online and mobile environments. Various authentication service reviews will be conducted through the financial regulatory sandbox within the year, based on security verification of biometric authentication technology and others.