SEOUL, May 6 (Korea Bizwire) — South Korea’s top financial regulator said Wednesday that it will pave the way for local banks to invest in financial technology firms as part of its efforts to boost the integration of the two industries.
According to current financial laws, financial institutions are allowed to buy stakes in or make contributions only to companies in the same business sector.
In a report submitted to the presidential office, the Financial Services Commission (FSC) said it will clarify the definition of “same business sector” in the laws, as institutions have been virtually banned from investing in fintech firms due to the ambiguous phrase.
The FSC will offer an authoritative interpretation later this month to make clear that fintech companies are included in the scope of the financial industry. This will also expand the sector’s business horizon in order to attract more money from banks and other financial institutions.
The regulator also said state-run policy lenders such as the Korea Development Bank and the Industrial Bank of Korea will set aside a combined 200 billion won (US$184.9 million) in funds this year to support fintech companies.
Fintech is a new type of information technology linked with financial services, ranging from mobile payments and remittances to asset management.
Thanks to South Korea’s high-end wireless infrastructure, leading mobile and online companies such as Naver Corp. and Daum Kakao Corp. are making inroads into the IT-finance consolidation business. However, they have complained of complex financial regulations and guidelines.
The FSC has put its policy priority on removing regulations and restrictions that block the development of fintech, as it sees the sector as a new growth engine to refresh the long-sluggish financial industry.
It is also considering opening doors to non-financial companies to establish internet-only banks by relaxing regulations on bank ownership.
The FSC will map out detailed guidelines before June that will allow industrial companies with high-end banking technology own online-only banks within the year.