The South Korean Financial Services Commission (chairman Choi Jongky pictured) has promised to set up a fund of 300 billion won (US$252 million) to boost investment in financial technology start-ups and scale-ups.

"It will open a new era for digitisation of securities, making a historic transition to a paperless system in 45 years since Korea's adoption of the securities depository system in 1974," Jongky said.

Earlier this month the FSC unveiled new rules to underpin the trend of financial companies investing in fintech business.

The guidelines expand the scope of FinTech business in which financial companies are allowed to invest by adopting a 'negative list' approach and recent trend in technology and regulatory environment. They expand it to:

• new and innovative technology such as artificial intelligence (AI), the internet of things (IoT); data business; and ICT (information and communication technology) business needed in the operation of financial business;
• innovative financial service providers accepted into the FSC’s regulatory sandbox or designated FinTech firms that want to operate business commissioned by financial firms; and
• FinTech businesses recognised by the FSC that operate for financial purposes.

Procedural period

To expedite the regulatory approval process, the guidelines require financial regulators to reply within 30 days and tell applicants whether they have approved this-or-that investment or not.

Ancillary business

At the moment, any ancillary businesses that financial firms are allowed to operate have to be related directly to their primary business. The guidelines make it clear that financial companies can operate FinTech businesses as "ancillary businesses" once the authorities have allowed them to do so.

Immunity from penalties

If financial firms make losses from their FinTech investments, they will be granted 'mitigation' or immunity from penalties unless they incurred such loss intentionally or out of gross negligence.

Timetable

The guidelines are to come into force next month temporarily for two years on condition that the FSC makes the relevant regulatory changes in the meantime.