[News in focus] FSS plans to add technology to regulationKorea’s financial watchdog is set to introduce new technologies aimed at improving the efficiency of the country’s multi-layered, complex regulatory system.
The Financial Supervisory Service (FSS) announced on Monday that it will launch a pilot project aimed at making regulatory reports machine-readable with the use of advanced technologies, such as natural language processing.
The pilot project will help financial companies digitally file regular operation reports with the FSS. Presently, the process is done manually, but the technology, dubbed machine readable regulation, will allow for automated importing of data into the reports to enhance efficiency.
The push to introduce technology into regulation is in line with the FSS’s annual goals announced in July.
“We are planning to embrace machine readable regulation, becoming the first country in Asia to do so,” said Yoon Suk-heun, head of the FSS. “We are going to form a committee consisting of experts in academia, industry and law to expand regulatory technology into financial companies and electronic financial service operators within this year.”
In the project, which is being conducted jointly with the Financial Security Institute (FSI), a state-run institute, the FSS will also spearhead the development of a software intermediary or application programming interface fitted with a machine-readable function and aim to distribute them to each company next year.
The initiative will also look into deploying artificial intelligence to review the terms of financial products. Officials at the FSS currently have to manually sift through files to determine whether the terms comply with the rules and principles of consumer protection.
If successfully adopted, the artificial intelligence-backed (AI) system would reduce the human input and cost spent on the oversight procedure.
The FSS said that AI will be used in the first stage to check for major breaches, but officials will also then double-check them. The FSS also plans to introduce a chatbot on its website so the public and companies can ask questions about financial regulation and consumer protection.
The watchdog also vows to use more advanced algorithms to combat voice phishing scams. It aims to develop an AI program designed to preemptively detect different types of fraud attempts through voice calls and text messages. It will distribute the system to smaller companies for free.
“The pilot project will go on this year and we will go into the official phase next year, should there be no major error or problems,” a source at the FSS said.
Industry players believe that today’s digitalized financial system will boost demand for regulatory technologies. Global consulting firm KPMG projected that investment in regulatory tech is on the rise. Back in 2015, investment was $870 million, but it grew to $1.37 billion as of June this year.
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