Seoul, South Korea – The Financial Services Commission (FSC) announced on November 28th new criteria for licensing new internet-only banks, placing a strong emphasis on innovative financial services targeting small and medium-sized enterprises (SMEs) and startups in regional areas.
The new licensing process will focus on four key evaluation criteria: financial stability, innovation, inclusivity, and feasibility. The FSC has incorporated findings from a recent assessment of the financial industry's competitiveness, which highlighted the need for increased financial inclusion for SMEs and startups outside of metropolitan areas.
Applicants will be required to present a comprehensive strategy for providing financial services to underserved segments of the population, particularly in non-metropolitan regions. To incentivize this, the evaluation will include specific points for offering innovative financial products and services that are not currently provided by existing financial institutions, as well as for providing funding to regional businesses.
The FSC emphasized the need for increased financial services for SMEs, especially in non-metropolitan areas, where access to credit is often limited. The commission noted that competition in the SME lending market, particularly among traditional banks, has been relatively weak.
An Chang-guk, director of the financial industry bureau at the FSC, explained that the new criteria "maintain continuity with the existing standards for internet-only banks while deepening the evaluation of each item."
To ensure financial stability, the FSC will conduct stricter assessments of major shareholders' funding capabilities and additional capital raising plans. The evaluation of innovation will focus on business models that can create innovative financial services not offered by existing financial institutions.
Furthermore, the FSC will conduct a more thorough assessment of the feasibility of business plans, establishing a technology evaluation division to assess the feasibility of business plans and credit rating models. The commission also plans to impose conditions on banking licenses to ensure that business plans are implemented.
The licensing process for new internet-only banks will begin with an information session on December 12th. The FSC will accept preliminary applications in the first quarter of 2025 and announce the results in the first half of the year.
By prioritizing financial inclusion and innovation, the South Korean government aims to foster a more competitive and inclusive financial sector that better serves the needs of SMEs and startups in regional areas.
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