Financial Services Commission "Received 199 Applications for Innovative Financial Services in Q1"

Results of the First Quarter Regular Application for Innovative Financial Services by the Financial Services Commission

The Financial Services Commission announced on the 17th that a total of 199 applications were received during the first quarter regular application period for the designation of innovative financial services this year.

The types of applying companies were financial companies with 174 applications (87.4%), fintech firms with 15 applications (7.5%), big tech companies with 6 applications (3.0%), and others with 4 applications (2.0%). The types of financial services applied for were mainly electronic finance and security (131 applications, 65.8%), insurance (47 applications, 23.6%), capital markets (8 applications, 4.0%), and specialized credit finance (6 applications, 3.0%), followed by loans (2 applications, 1.0%), and banking, data, and P2P (1 application each, 0.5% each).

This time, applications for the government-led planned sandbox stood out. The planned sandbox is a top-down sandbox model led by the government, from planning tasks to demonstrate the need for regulatory improvements to recruiting businesses. This contrasts with the existing sandbox, which is bottom-up, where businesses request regulatory exemptions and undergo review.

Examples include the 'Regulatory exemption for network separation to use SaaS and generative AI within internal networks' in the electronic finance and security sector (125 applications) and the 'Regulatory exemption on sales ratio for financial institution insurance agencies' in the insurance sector (43 applications).

The 'Use of SaaS and generative AI within internal networks' service was planned to gradually improve network separation regulations in the financial sector. Difficulties caused by network separation regulations will be immediately resolved through the sandbox, and based on operational experience, institutional improvements will be considered.

The 'Regulatory exemption on sales ratio for financial institution insurance agencies' service was planned based on the Insurance Reform Committee announcement. Currently, financial institution insurance agencies cannot exceed a 25% sales ratio for a specific company’s insurance products. The sandbox will relax this sales ratio to test its effects and consider institutionalization.

The Financial Services Commission plans to decide on the designation of innovative financial services through deliberation by the Innovative Finance Review Committee within the statutory review period (up to 120 days) for the applications received during this regular announcement period. The regular application for the second quarter of this year is expected to be announced in May and accepted for two weeks in June.