With a budding financial technology industry, South Korea is prime for fintech growth. In order to develop the fintech market within South Korea, the Financial Services Commission (or FSC), has made plans to launch a digital sandbox in which they may test future fintech products and services. This announcement also allows South Korea to test trial of new products, to enable customers to find new services and offerings.
As one of the specified top priorities for 2020, fintech has received the government of South Korea’s pledge of full support. They have not only shown their approval but created a budget of $16 million (USD) in order to cultivate growth. South Korea’s open banking system first launched back in the winter of 2019, which enabled fintech firms to access payment networks, as well as pay lower transaction fees, due to several open API initiatives.
New Opportunities for Fintech
Budgets and governmental support go a long way in nurturing projects still in the early stages. A sandbox environment would provide service and product support, and while also streamlining operations. Sandbox ecosystem isolation enables programs to be advised individually, apart from various other services. Because data is so important, it moulds how firms engage and operate with one another, as well as with their clientele.
The position of incumbent banks has moulded the fintech service adoption rates observed in South Korea. Recent reports have shown that nearly half of the South Korean population is vastly underserved, although they stand among the world’s top technologically advanced countries. Because their citizens take part in a digitally connected world, South Korea holds third place for the most broadband internet users within OECD countries. As a country, they are also a global leader in digital displays, electronics, mobile phones, and semiconductor devices. Each and every one of these factors proves South Korea is the prime environment for fintech service advertisement – while the COVID-19 pandemic only enriches the digital service industry.
South Korea’s Virtual Sandbox
With plans of promoting digital finance and financial innovation, fintech news finds that the FSC has already outlined their planned work for 2021. Fintechs will finally be enabled to test new business ideas virtually within South Korea’s digital sandbox sometime in June, although official dates have not been announced. The FSC’s flagship financial regulatory sandbox was formally introduced back in April of 2019, which experienced a designation of 137 providers.
The overall sandbox program management will see some improvements as well, according to recent reports. With an urgency to establish a more comprehensive support system, the FSC plans to utilize legislation in order to focus on nurturing fintech growth throughout 2021. While Q1 saw the beginnings of financial support, through state-backed financial institutions, the FSC has pledged the work has already begun. Promoting online fintech as a safe service is a main part of the initiative, especially across all industries. In order to encourage the use of big data analytics, enhanced authentication, and identity verification systems, the regulator is working on the aforementioned initiatives embolden public acceptance.
In order to maintain consumer rights and protect data privacy, the FSC has agreed to strengthen their rules surrounding network separation. This ensures aid will be directed toward telecommuting by fintech staff and financial institutions – any possible data transfer risks will be under severe scrutiny. And, while new infrastructures continue to be set up through 2021, consumers will experience smooth convergence of data being stored at fintech firms, and various other industries. Adhering to consumer safety guidelines will promote the further development of services, such as AI-based financial services.