The FSC plan aims to boost number of integrated financial firms taking up fintech financial firms as the walls dividing the financial sectors are softened
Chairman Choi Jong-gu of Financial Services Commission(FSC).
The new government plan to ease conditions for allowing new financial investment firms to get licenses to operate is centered on softening the entry conditions and the walls dividing the types of businesses in the industry, according to experts.
The new plan also aims to license the setup of integrated financial firms for the first time in a decade so they combine with new fintech-enabled financial firms.
Another goal is to ease the conditions for the regulations on licensing and registrations, which are burdensome for financial firms that wanted to expand beyond the walls dividing the financial businesses.
Financial sources believe the government has opted for policies to create jobs first instead of those designed to help create bigger investment banking firms, while small and medium-sized securities firms might be forced into tough times with competition among securities firms growing tougher in the first half.
The Korea Financial Investment Association said the number of securities firms stood at 62 at the end of 2009 and has been cut to 57 at the end of 2018. With the number of employees at those firms cut by 12 percent from 41,326 to 36,377.
FSC believe that the new Capital Market Law put into force in 2009, limiting the new securities firms only in specialized areas and not licensing the integrated securities firms since then is not unrelated to the situation.
South Korea will license six new entries to the financial sector, including two internet-only banks, by June.
The Financial Services Commission announced a set of deregulation policies to revitalize the financial sector.
In January, Hanwha General Insurance Co., SK Telecom Co. and Hyundai Motor Co. obtained preliminary approval from the FSC to launch Infit General Insurance, an internet-only insurance business. Earlier this month, three real estate investment trusts were also granted approval.
The financial authority will approve up to two more internet-only banks.
Currently there are only two pure-play internet banks in Korea: K Bank and Kakao Bank. Two to four candidates, including the Shinhan Financial-Viva Republic consortium and the Kiwoom Securities-Kyobo Life Insurance-SBI Savings Bank consortium, are said to be in the running.
The FSC will also relax regulatory barriers to allow more boutique financial services to enter the market, starting with low-risk businesses like micro-insurance firms.
The FSC intends to lift regulations on wearable technology for health insurers so they can subsidize the devices to complement their insurance plans.
Card companies would also be allowed to leverage their big data when providing consulting services without having to report to authorities in advance.
The country’s financial regulatory agency will revamp the way it licenses financial businesses by lowering the capital requirement and establishing a dedicated committee to handle new business approval.
A committee consisting of nine outside experts will be in charge of assessing applications for banking, insurance and securities licenses in a bid to increase transparency and efficiency.
The focus was on whether the regulator will accept new bidders to operate as internet-only banks after the launch of two online-only banks - K Bank and Kakao Bank - last year.
“The two internet-only banks grew in size and contributed to promoting competition in the industry,” said Choi Hoon, director general of the banking and insurance bureau at the FSC. “So, we will actively consider accepting more players as internet-only lenders as long as there is market demand.”
The two existing internet-only banks have 5.77 million clients between them, with total savings at 6.6 trillion won ($6.1 billion) and loans at 6 trillion won as of April 19, according to the regulator.
The insurance business has long been considered particularly difficult to enter since the regulator requires at least 30 billion won in capital to start the business.
The agency said that the limit will be lowered for applicants who specialize in providing small, short-term insurance services, adding that a more specific standard will be released later.