Tasks related to capital market have been removed from designated representative system which is for innovative growth of financial industries in South Korea. Financial investment industry is looking to take actions first on digital innovation by establishing their own platforms rather than waiting for improvement in legal system.
According to financial investment industry in South Korea, it has become impossible for financial investment industries such as stock firms and asset management companies to apply for designated representative system that has been recently enforced by Financial Services Commission (FSC). Although major financial industries such as banks, insurance companies, and loan companies as well as savings banks and credit unions are part of this system, financial investment industry is removed as a subject of this system.
Designated representative system is a system that allows financial companies to trust their major tasks with FinTech companies and have FinTech companies demonstrate innovative financial services to consumers and choose excellent technologies and ideas. It is a measure that has been set up to support financial companies with actively testing innovative financial services before Financial Innovative Support Special Act was legislated to vitalize FinTech industry.
“Financial investment industry is the one that can test various technologies such as Bit Data and AI (Artificial Intelligence) by utilizing enormous amount of data on transactional information.” said a representative for financial investment industry. “Fact that financial investment industry has been removed from designated representative system shows FSC’s passiveness of working in innovation within legal and systemic boundaries.
Financial investment industry has been more active on introducing new technologies compared to other financial industries. It introduced robo-advisers based on AI and Big Data and joint-authentication and biometrics based on blockchain and it also detects suspicious transactions through AI technology. There is a high chance that financial investment industry will introduce new technologies based on Big Data as it has twice the amount of Big Data compared to banks and insurance companies.
Large stock firms are already working on digital innovation by working with FinTech companies. Mirae Asset Daewoo opened a homepage of ‘Mirae Asset Digital Innovation Platform’ on the 24th. Its goal is to create a FinTech hub to establish network with financial investment companies, FinTech companies, and relevant organizations and find new technologies and ideas.
It is introduced with same purpose as that of designated representative system enforced by FSC. However, pilot services for normal consumers are impossible without applying for designated representatives.
Financial investment industry believes that it needs an extensive preparation that follows revision of laws to introduce designated representative system. “Unlike laws on banks and insurance companies, financial investment industry’s individual permission itself regulates fundamental tasks of financial industries.” said a representative for financial investment industry. “Because it is difficult to divide tasks, active legal interpretations from FSC are very important.”
Actually, it is unclear whether establishment of HTS (Home Trading System) and MTS (Mobile Trading System) corresponds to an essence of financial investment industry according to current laws. There are not clear standards unlike savings for banks and discounts for insurance companies. Financial investment industry is pointing out that FSC needs to improve its system by actively incorporating opinions from financial investment industry.
FSC is stating that it will examine demands from financial investment industry in the future since testbeds are introduced to robo-advisers. “We are going to respond to demands for vitalizing FinTech industry by introducing separate testbeds that correspond to characteristics of financial investment industry.” said a representative for FSC. “We are currently gathering opinions from financial investment industry regarding introducing testbeds.”
Staff Reporter Ryu, Geunil | ryuryu@etnews.com