[Photo by the Financial Services Commission]

Unconventional financial services will likely be doubled in the second half in Korea under the expansion of regulatory sandbox.

According to a survey conducted by the Financial Services Commission, 142 entities are submitting application for regulatory sandbox or exemptions to experiment with 219 novel financial services in the July-December period. By entity, 41 financial companies including banks, financial investment firms, and insurers are prepping up to apply for regulatory benefits of 96 services, and 101 other companies including financial technology companies of 123 services. The survey was conducted from July 15 to 26.

Under the government’s regulatory sandbox policy, companies receive fast-track regulatory reviews and licensing. The deregulation measure, which targets companies seeking new opportunities, was introduced to propel innovations in Korea amid the era of fourth industrial revolution.

Compared to pre-applications for the first half of this year, the number of entities seeking to apply for the benefits jumped 61 percent and services 108 percent. Of 39 entities that were designated as innovative financial firms in the first half of this year, 13 companies, including 7 fintech firms and six financial firms are pushing to receive deregulation benefits for an additional 32 services.

By sector, 24 services are in the banking industry, 46 in capital market, 24 in insurance, 33 in credit, 27 in data, 28 in electronics finance and security, six in personal-to-personal business, 20 in loans, and 11 in foreign exchange and others. A total 70 services integrated fourth industry technologies with finance, such as 15 services in artificial intelligence sector, 20 in big data, 28 in block chain, and 7 in authentication and security.

The FSC plans to carry out procedure for examination by its innovation committee after receiving consulting service of its survey. For those entities that lack service details, the financial authority will advise to complement documents. It will also review improving regulation for those services that require deregulation measures. Services that will benefit from regulatory sandbox policy will be those that involve innovation and provide more convenience to financial consumers.

Under special law on financial innovation support, innovative financial services are subject to regulatory sandbox benefits that allow test operations of new financial services for up to four years without going through complex reviews and licensing. So far, 42 innovative financial services have been designated by the financial authority since it introduced the special law in April, this year.

By Lee Sae-ha and Lee Eun-joo

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