South Korea's financial regulator opened its fintech sandbox to its first wave of approved companies this week. The Financial Services Commission selected 18 projects from over 100 applicants to test
South Korea's financial regulator opened its fintech sandbox to its first wave of approved companies this week. The Financial Services Commission selected 18 projects from over 100 applicants to test new financial products under relaxed rules for up to two years. Three of the winners work with blockchain.
Directional will test a blockchain-based stock lending platform for retail investors. KOSCOM developed a system to maintain shareholder records for unlisted small and medium-sized companies using blockchain, helping facilitate peer-to-peer over-the-counter stock trades. Kasa Korea built a blockchain platform for issuing and distributing mortgage-backed securities as digital assets.
The FSC launched the regulatory sandbox on April 1, 2019. The program lets fintech firms and established banks trial new services without certain regulations getting in the way.
The approved companies span different corners of the fintech world. KB Kookmin Bank is testing a low-cost service delivered through mobile apps. Shinhan Card submitted a credit card-based money transfer service called PayFan. Payple proposed an online payment system that uses mobile text verification. Root Energy wants to let local residents invest in new renewable energy projects through peer-to-peer financing. VivaRepublica's Toss app shows users loan options at fixed rates from multiple lenders. Fintech Inc. created a service that analyzes car loan products based on the borrower's credit score, accident history, driving background and experience. Douzone built a system that assesses creditworthiness for unaudited small and medium-sized companies using their tax information.
FSC chairman Choi JongKu met with fintech entrepreneurs, bank executives and investors in January to outline the regulator's plans. "The FSC will spare no effort to support fintech companies to come with globally competitive services and spread fintech innovation across the financial sector," Choi said. He called 2019 a pivotal year for the sector.
The sandbox fits within a broader regulatory agenda. The FSC is pursuing changes around fintech investment and building out an open banking system.
South Korea's government put fintech and other innovative technologies at the center of its economic strategy. It allocated 1 trillion won, or about $880 million, in 2019 toward technological advancement.
Seoul set its own agenda the previous year. The city launched a five-year program committing 123.3 billion won, about $108 million, to develop blockchain-powered smart city infrastructure. Mayor Park Won-soon introduced the plan in October 2018. The Blockchain Urban Plan runs from 2018 to 2022 and spans 14 public services across five areas: labor benefits, vehicle history tracking, certification issuance, donation management and voting.
