Regulator to test out ‘robo adviser’ certification

The nation’s financial regulator will establish a test certification system for robo advisers, in a bid to standardize technology for computer programs that perform automatic investments.

The Financial Services Commission said Sunday that it will allow financial entities and technology companies that use robo adviser programs to register for the system starting next month.

The commission said these firms will be allowed to advertise themselves as certified to operate robo advisers.

The test system will target robo advisers handling equity funds and derivative-linked securities, excluding platforms for bonds, futures and option deals.

The entire test phase will consist of three stages - preliminary, midstage and final examination - and could last up to six months in total.

During the review, a committee composed of outside experts will cooperate with Koscom, a state-run financial IT solution company, to look into whether the system can allocate, deploy and rebalance investments.

Once the system passes the test phase, it will be allowed to handle investments without the interference of human financial advisers.

The latest measure is a part of the financial regulator’s efforts to foster fintech, a sector that applies advanced technology to financial services. It has designated big data, robo advisers and biometrics as the most promising areas in need of new investment and technology development.

Proponents of robo advisers say they can deliver more accurate advising services at lower costs than human financial advisers, while skeptics believe that the technology has limits to completely replace humans.

The local financial industry is nonetheless betting on robo adviser programs.

Mirae Asset Daewoo, in partnership with four local investment firms, launched the nation’s first set of automated investment services earlier in March, where individual investors can pick from seven robo adviser investment models engineered by the four firms.

NH Nonghyup Bank became the first commercial bank in Korea earlier this month to launch a robo adviser program that will manage investor portfolios and assist clients in their retirement plans.

BY PARK EUN-JEE [park.eunjee@joongang.co.kr]