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Roundup: S. Korea to push convergence of IT, finance for mobile settlement

Xinhua, January 27, 2015 Adjust font size:

South Korea will push a convergence between finance and information technology (IT) to make it convenient for consumers to purchase products online via mobile settlement tools and foster "FinTech" industry as new growth engine, the country's financial regulator said Tuesday.

The Financial Services Commission (FSC) said in a statement that it will make a "paradigm shift" in regulations on mobile transactions to allow banks to apply new technologies to financial services while making it easier for tech firms to offer more digitized financial services.

The comprehensive deregulation came eight years after the country introduced an electronic finance transactions act, which has tightly controlled mobile transactions and blocked the entrance of IT firms into financial industry.

Demand for deregulations has been mounting as global IT companies, including Alibaba Group and iPhone maker Apple, already speeded up entrance into the FinTech market.

The FinTech is a new jargon combining finance and technology, referring to new financial services through mobile devices, such as money transfer and payment and settlement with smartphones.

President Park Geun-hye instructed regulatory officials in March 2014 to deregulate the finance industry to enable foreign customers to purchase coats online, which were worn by a heroine starring in the smash-hit South Korean TV series, "My Love from the Star."

The soap opera gained popularity in Asia, especially in China, and stirred up demand for the heroine coats. Some customers living abroad were unable to access South Korean online stores for Active X, a software framework that prevented Chinese customers from reaching out to online shops.

President Park asked government officials in July again to develop convenient mobile settlement services such as Alibaba's Alipay and eBay's PayPal, both of which provide an online payment service to transfer money and buy products from online stores.

South Korea's mobile settlement more than doubled from 1.35 trillion won (1.25 billion U.S. dollars) in the second quarter of 2013 to 3.19 trillion won a year later. Global settlement with mobile devices is estimated to surge from 353 billion U.S. dollars in 2014 to 721 billion dollars in 2017, according to U.S. IT research and advisory firm Gartner.

To lower barriers to the Fintech market, the FSC will transform a regulatory frame from a pre-inspection to a post-responsibility system. Instead of removing requirements for financial companies to win a regulatory approval for new services, the companies will take greater responsibility for security incidents to induce them to secure more advanced security programs by themselves.

Abolishing requirements to use publicly certified platforms for identification is expected to commercialize various identification programs, such as fingerprint or iris verification through wearable devices.

The regulator also plans to design a model for Korea-style " Internet Bank" by June. If the Internet Bank is allowed, people can open a bank account online to settle transactions and transfer money "without visiting bank branches in person." Identification process will also be made online. Endi