The regulations on the ownership and investment of fintech by financial holding companies will be eased. This is a measure to utilize the capital strength of financial holding companies as a catalyst for investment in fintech corporations. Moreover, the outsourcing of operations between subsidiaries under financial holding companies will also become easier than before. The financial authorities noted that an expected outcome of this regulatory relaxation is the promotion of the launch of innovative financial services, such as the development of super apps.
◇ Increase in fintech equity limits for financial holding companies
The Financial Services Commission announced measures to relax regulations on financial holding companies during a key issue resolution meeting for the first quarter of the 2025 economy held on the 8th. First, the threshold for financial holding companies' fintech investments will be lowered. Currently, financial holding companies can only own up to 5% equity in fintech corporations that are not subsidiaries. After the system improvement, the equity ownership limit will increase to 15%.
Additionally, after the system improvement, fintech corporations under financial holding companies will be able to have other financial companies as subsidiaries. Under the current system, the range of financial companies that can be controlled by subsidiaries of financial holding companies is defined. Banks can control credit card companies and debt collection companies, while insurance companies can control investment management companies, among others. However, the scope for fintech companies under financial holding companies to own other financial companies has not been defined, effectively preventing them from having other companies as subsidiaries. In response, the Financial Services Commission plans to set the range of related financial companies and allow them to be subsidiaries.
The Financial Services Commission expects that the scale of fintech investments in the financial sector will expand after easing regulations on financial holding companies' fintech operations. A representative from the Financial Services Commission explained, "Fintech corporations can receive support from financial holding companies while maintaining management rights, and financial holding companies can collaborate with fintech corporations through an appropriate scale of equity investment without direct control as subsidiaries."
◇ Streamlining outsourcing procedures within financial groups
In addition, the restrictions on the business scope of financial holding companies will be partially relaxed, and the outsourcing procedures within the group will be streamlined. Previously, financial holding companies were unable to engage in profit-making businesses except for management operations. The Financial Services Commission plans to allow financial holding companies to operate integrated financial platforms and group branding businesses in the future. Furthermore, while prior approval and reporting were mandatory for outsourcing within the group, the process will be simplified to change to prior reporting and post-reporting.
The Financial Services Commission plans to establish a regulatory relaxation plan for financial holding companies containing these details by June of this year. Additionally, it plans to amend related laws to eliminate obstacles to attracting new businesses and investments for financial holding companies.
◇ Allowing card transactions between individuals
Additionally, the financial authorities announced a blueprint for a set of five elder support insurance plans. The Financial Services Commission will reveal detailed information regarding new insurance policies at the upcoming insurance reform meeting in February, which will include ▲ liquidity of death insurance payouts ▲ ISA age-based savings account medical expense withdrawal permission ▲ introduction of preferential interest rates for insurance contract loans ▲ expansion of eligibility for elderly and chronic illness insurance (from 70-75 years to 90 years) and coverage (from 100 years to 110 years) ▲ activation of trust businesses by insurance companies.
Meanwhile, the Financial Services Commission plans to allow card transactions between individuals. The Commission plans to revise the system to allow monthly rent payments from real estate lease contracts between individuals to be made using credit cards within the first half of this year. The limit for card payments for rent is set at 2 million won per month.