Korean fintech deregulation may be “inevitable,” but in any case, the Korea Federation of Banks thinks it could do with a little fast-tracking.
The Korea Federation of Banks on Monday called on the incoming policymakers to steer clear of a set of regulations that it said have deterred local banks from dealing with the environment shift in financial circles.
The banking federation suggested the new Moon Jae-in administration publicize fingerprints and ease regulation on servers for cloud computing and blockchain technology, based on which the federation said the banks would be able to pursue innovation.
In a press briefing, federation chairman Ha Yung-Ku said that while privacy is indeed important, “excessive regulation that hampers banks from taking advantage of (technologies) should be normalized.”
The federation also highlighted the need to ease restrictions on non-banks owning larger stakes in financial firms. South Korean law currently forbids non-banks from owning more than 4% of a bank. This is apparently due to fears that the non-financial company would end up using the bank as a private vault.
Today however, this law has been stifling online-only banks, so much so that their operations have purportedly been suffering. Here’s what Ha had to say about revising the law:
“The line between banks and other finance-related industry are blurring…under the current law, the firms with information and communication technology are having trouble operating internet-only banks.”
“We are in need to create a fresh model to cope with the shift in paradigm in the wake of the ‘fourth industrial revolution,’” he added.
Regarding fintech startups, Ha charged the point that policymakers should play a larger role in the startup financial system, saying that these companies should receive investments – rather than loans.