South Korea’s fintech sandbox lands $110m and creates 380 jobs
South Korea’s fintech sandbox has landed $110 million (KRW 136.4 billion) in funding and has created 380 jobs so far, local newspaper Shina Ilbo reports.
In effect since April last year, the sandbox was set up by South Korea’s regulator, the Financial Services Commission (FSC), with an initial $3.5 million (KRW 4 billion) investment to kickstart the programme.
The sandbox allows fintechs to test their proof of concepts whilst being exempt from regulations and licensing for up to four years.
“The evaluation is based on the level of innovativeness, potential contribution to consumer convenience, and the soundness and feasibility of business plan,” the regulator’s report reads.
The FSC says 36 fintech services have launched through the sandbox after being closely monitored for a year. There are another 66 services still going through the final stages, expected to be introduced sometime in 2021.
The regulator highlights that the $110 million raised in venture capital so far through the sandbox was attracted by 16 of the 54 fintechs taking part in the programme.
Seven of these fintechs have grown aggressively during the last year and are gearing up to expand to 14 new markets, including Thailand, Vietnam, and Indonesia.
In terms of types of fintech, the banking sector came out as the most dominant point of interest, with insurance, capital markets, lending and IT all industries which follow close behind.
In particular, the FSC says verifying the utility and safety of blockchain technology, as well as experimenting with “real estate quote evaluation, chatbot service, and credit evaluation” using artificial intelligence (AI), are all also areas of development.
And due to the current coronavirus crisis, non-face-to-face financial transactions are becoming more important, causing automation in account opening, loan comparison, and insurance subscription to be explored.
“With the COVID-19 pandemic, the demand for data or platform-driven services has increased,” the regulator said in its report.
“The FSC will continue to support the development of innovative financial services through its regulatory sandbox program.”
From 25 May, the FSC is set to hold ‘innovative financial review’ committees looking at each sector, starting with banks, insurance and credit speciality.