2 Years of Financial Regulation Sandbox... 139 Innovative Financial Services Designated

Currently 78 Service Tests... A Total of 108 Releases Scheduled for the First Half of the Year

[Asia Economy Reporter Kwangho Lee] The Financial Services Commission announced on the 8th that since launching the 'Financial Regulation Sandbox' system on April 1, 2019, a total of 139 innovative financial services have been designated over the past two years.

Once designated as innovative finance, regulations such as licensing and business activities are deferred or exempted for up to four years, allowing ideas and technologies to be quickly tested and commercialized.

Currently, 78 services are being tested in the market, and by the first half of this year, a cumulative total of 108 services are expected to be launched.

Among the government's total 433 regulatory sandbox cases, financial innovation accounts for 32% (139 cases). This is followed by the Ministry of Trade, Industry and Energy with 27% (116 cases), the Ministry of Science and ICT with 21% (90 cases), the Ministry of SMEs and Startups with 15% (65 cases), and the Ministry of Land, Infrastructure and Transport with 5% (23 cases).

The benefits gained from innovative finance include enhancing convenience in financial life and reducing financial usage costs.

Services such as the 'facial recognition payment service,' which allows easy payment by recognizing the face on a machine without taking out a credit card or mobile phone, and services enabling small business owners to join credit card merchant networks remotely, make financial use easier and more convenient. These also help prevent the spread of COVID-19.

Platforms like the 'online loan comparison and recruitment' service, which allows users to compare conditions such as limits and interest rates from various financial companies to select the most advantageous loan, are good examples of new ideas that reduce costs and save time.

Innovative finance is also helping the growth of fintech and startups.

Fifty-seven fintech companies have entered all areas of finance including remittance, payment, authentication, insurtech, and capital markets through innovative finance. These companies are also creating quality jobs such as developers, designers, and marketers. The jobs created by 52 fintech companies have reached 562.

The achievements of innovative finance are also helping these companies gain new investment and expand overseas, as well as increasing opportunities to collaborate with existing financial companies. Twenty-nine fintech companies have attracted a total investment of 585.7 billion KRW.

Through these changes, the use of new technologies such as artificial intelligence (AI), big data, and blockchain is spreading widely in the financial sector. Technologies are being utilized to automatically evaluate and provide the value of corporate patents and other technological capabilities using AI, or to record real estate transaction histories on distributed ledgers via blockchain to enhance the reliability of transaction record management.

The Financial Services Commission plans to hold the Innovative Finance Review Committee twice quarterly this year and strengthen the financial regulation sandbox system.

Financial Services Commission Chairman Eun Sung-soo said, "Starting from the second quarter, we will operate a 'Digital Sandbox' (tentative name) to provide a testing environment based on big data to verify ideas or technologies before early fintech companies launch their services."