South Korea’s top financial regulator Tuesday vowed to induce fair competition between conventional financial companies and Big Tech groups, in preparation for the forthcoming digital shift in the local financial industry.

“Responding to the non-face-to-face trend triggered by the COVID-19 outbreak, a growing number of major technology companies, or Big Tech, have been pursuing (new opportunities) from the financial services industry,” said Financial Services Commission Chairman Eun Sung-soo at a seminar held to celebrate the 9th annual Information Protection Day.

“The rise of Big Tech is inevitable. (The FSC) will support their innovations, while building up a market environment for fair competition between the conventional financial companies and new players by addressing an imbalance in terms of financial regulations,” Eun said. 

Big Tech refers to the country’s IT giants -- namely Naver and Kakao -- which have been offering online financial services based on consumer data on their e-commerce platforms. Naver’s financial services unit, for instance, has partnered with local investment firm Mirae Asset Daewoo so that users can create cash management brokerage accounts online.

The FSC also pledged to come up with risk management measures for consumers by revising the current Electronic Financial Transaction Act that would obligate financial companies to strengthen security to prevent possible cyberattacks. 

In addition, the revised bill would obligate operators of online financial services to deposit prepaid money at local lenders for enhanced protection of assets traded online.

The regulator also plans to unveil a comprehensive framework to foster digital financing by the end of this month. 

“A series of measures to innovate the current face-to-face ID verification in the financial sector will be announced during the third quarter,” said Eun. 

At the seminar, Kim Hong-sun, chief information security officer at Standard Chartered Bank Korea received an award in recognition of his contribution in improving financial security and data protection.

By Choi Jae-hee (cjh@heraldcorp.com)