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| Prime Minister Lee Nak-yon, third from left, speaks during a policy meeting at the Sejong Government Complex, Thursday. Yonhap |
By Park Hyong-ki
The government will push to revise relevant laws to offer greater leeway for fintech startups here in creating new business models, the Financial Services Commission (FSC) said Thursday.
Once realized, local players will be allowed to adopt business models and financial services developed by global unicorns.
The FSC pointed to Kabbage, a U.S. fintech startup that offers loans to small businesses and retail consumers via its platform, as an example of a model that can be helpful for the local market.
"We will consider whether to allow the adoption of overseas models by local startups beginning in July," an FSC official said.
Currently, only banks and non-banking financial units such as mutual savings and credit card firms can offer direct loans to businesses and consumers.
The consideration of a possible revision comes as Prime Minister Lee Nak-yon said the government is seeking to further reinvigorate fintech in an effort to boost innovation and create new industries through deregulation.
"I urge all government agencies to move forward in relaxing rules after reflecting on the needs of the market so that new industries such as fintech, drones and hydrogen vehicles can be developed," Lee said at a policy meeting in Sejong administrative city.
The FSC's taskforce has reviewed 188 cases of potential financial services integrated with new technologies for possible revision.
It will propose amendments to laws at the National Assembly that will enable local companies to pursue 150 of the integrated financial services in the latter half of 2019.
One of them will be allowing local financial companies to acquire a 100 percent stake in fintech startups, up from the current maximum of 15 percent.
This is a follow-up to a plan unveiled by the government in November 2018.
It then said it will move to give local financial companies more authority to define and identify fintech for equity investment and acquisition, as long as the targets are able to help them innovate and expand.
Given that fintech startups have been in a gray zone, where they are considered more as nonfinancial companies, it has been difficult for financial companies to acquire them.
Basically, the Banking Law says a bank cannot have a nonfinancial company as a subsidiary.
The regulator will also suggest a revision allowing financial companies to share customer data among their affiliates and subsidiaries.
This is part of efforts to boost big data analysis in finance, it noted.
Fintech startups and financial companies will be able to gather and sample consumer data to analyze and study their customers' financial patterns using a new database called CreDB.
