[News in focus] Sandbox inspires tech stampede

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[News in focus] Sandbox inspires tech stampede

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Source: Financial Services Commission, Financial Supervisory Service

Internet banking, it turned out, was not all the rage in January, despite high expectations. It was the “sandbox” that caught the imagination of finance companies and rising start-ups.

When regulators held an information session late in the month about the internet-only bank application process, only about 30 parties in the finance sector showed up, a number seen as low. When applications were accepted in January for the selected lifting of regulations for technology testing purposes - the regulatory sandbox - 88 companies lodged applications for 105 proposed services.

The showing was considered strong, significant and surprising.

“It was something unexpected - much more than what we expected,” said Jang Gyeong-woon, head of the fintech support department at the Financial Supervisory Service (FSS). “So we had to increase the number of final candidates from 10 to 20.”

Among the applicants are major players - such as NongHyup Bank and Shinhan Financial Group - and smaller start-ups, including QARA, a provider of artificial intelligence for robo advice and private information management, and Banksalad, a platform for asset management and the tailored recommendation of financial products.

The FSS and the Financial Services Commission (FSC) will narrow down the list to 40 this month and then select the final 20 by the end of March.

The law that backs the regulatory program is scheduled to take into effect in April. The regulators said those not accepted in this first round can apply again later.

“This process is intended to select services eligible for the regulatory sandbox when the law is implemented,” the two regulators said in a statement.

“Even if the participants fail to be accepted, we will open a new registration in April. Failed candidates can try again,” they said.

Britain’s Financial Conduct Authority (FCA) introduced the sandbox idea in 2016. Since then, other countries have emulated the model, including Denmark, Russia, Canada and, most recently, Korea.

President Moon Jae-in has pushed the concept, and the Ministry of Trade, Industry and Energy announced four areas to benefit from regulatory exemption. Projects accepted include the Hyundai Motor proposal to build hydrogen charging stations in the capital city and Macrogen’s submission to test personalized genetic-testing health -care services.

As for finance, many applications were reportedly lodged for services related to money transfers and payments. But there were also applications concerning more cutting-edge technologies, such as those related to blockchain.


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

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