Headquarters of financial groups Shinhan, Woori, KB Kookmin and Hana / Korea Times file

Expectations that a recent revision by the Financial Services Commission (FSC) will enable rapid, closer collaboration between financial groups and fintechs are losing pace, tempered by the failure of previous similar drives where financial service providers and their nonfinancial market peers clashed over business reach and market shares, market watchers said Thursday.

The FSC said Wednesday that the cap on financial holding firms' investments in fintechs will be set for 15 percent, eased from the previous 5 percent. This is part of an overarching drive to ease "separation of finance and industries," a principle where the capital of financial firms and nonfinancial market players remains separate, including their equity stakes.

The announcement fanned collective skepticism. The initiative by a former FSC chairman had lost momentum entirely, hamstrung by what the then-opposition bloc had characterized as an "anti-competitive practice that cements the unchallenged reign of cash-backed financial groups."

The decades-long issue can be tabled, they say, but the opposition-majority National Assembly is unlikely to pass the FSC revision amid the martial law fiasco.

"Wednesday's announcements are no more than a repeat of previously stalled policies, with no new meaningful developments included," an industry insider said.

The current regulations on the financial holding firms' equity stakes are governed not only by the laws on the capital markets but also ones on fair trade, warranting further review, in his view.

"The restrictions on equity stakes are outlined in the Monopoly Regulation and Fair Trade Act, in addition to the Financial Holding Companies Act. This means that it cannot be easily resolved by simply amending only one part of the law."

The FSC said the revision will be completed by June, but much depends on a potential snap election, followed by a moderate-to-entire overhaul of the government policy drives.

"The issue has failed multiple times, not because of viability concerns but because of the drawn-out politicization of it. Many don't see how this time would be different, especially with the martial law fiasco factored in."

The FSC maintains the revision will foster healthy partnerships where fintechs can secure funding and will maintain managerial control, and financial holding firms can bolster efficiency of equity investments.

The revision coincides with growing calls from budding tech industries, long stymied by a lack of financing opportunities despite promising growth prospects.

Some market watchers nonetheless view that the latest move can bolster cross-industry collaboration to some extent.

However, no significant expansion in digital technology is expected, since financial holding firms already have more than enough to match the current technological advantage of fintechs.

"The digital business of financial holding firms will be fortified more by progress in the easing of corporate network separation drives, enabling freer and faster information sharing among group subsidiaries. Still, the recent attempts to ease regulations can spur discussions on future endeavors," a Shinhan official said.

Shinhan Financial is collaborating with Toss, KakaoBank and Douzone Bizon.

Since March 2015, KB Financial has selected promising tech startups under the "KB Starters" initiative. A total of 285 companies have received a combined financing of 217.8 billion won ($148 million).