The Financial Supervisory Service (FSS) will begin a routine inspection of Naver Pay (Naver Financial) starting this week. This marks the first case of a fintech company undergoing an FSS routine inspection. The FSS plans to examine the financial product recommendation platform algorithm and the safety of the electronic system comprehensively. The results of this Naver Pay inspection are expected to set a standard for the intensity and direction of oversight in the fintech industry.
According to the financial sector on the 12th, the FSS will send inspection personnel to the Naver Pay headquarters in Seongnam this week and commence the routine inspection. Previously, the FSS requested necessary documents over two weeks last month, and reviewed those documents for another two weeks to prepare for the inspection. The on-site inspection is expected to take more than two weeks. This is the first routine inspection targeting a fintech company. The FSS has established a new organization in the digital and IT sector this year and has also created a new department for inspecting electronic financial service providers.
As it is designated as the first routine inspection of fintech, the inspection results for Naver Pay will serve as the benchmark for the FSS's oversight standards in the industry. The FSS plans to identify exemplary and inappropriate cases among Naver Pay's business practices to use as milestones in clarifying supervision directions. An FSS senior official noted, "If there are aspects in which Naver Pay excels, they will be introduced as cases for the entire industry, while areas deemed lacking will be considered common points for improvement across the industry and reflected in supervisory tasks."
The main keywords for this inspection are algorithms, electronic systems, and internal controls. The FSS will check whether the algorithms are designed to recommend the optimal products to consumers when using recommendation and comparison platform services such as loans or insurance. Previously, the FSS emphasized in March during a meeting with 10 CEOs of financial service providers that "fintech companies should design financial product recommendation algorithms centered on consumer benefits." The FSS has already discovered instances where some fintech companies prioritized financial products that do not align with consumer interests.
The electronic system is also a primary inspection item. Fintech services, including Naver Pay, provide all services in digital format. Additionally, services from big tech companies such as Naver Pay, Kakao Pay, and Toss are linked to portal or messaging services. It is also an inspection target to ensure that electronic errors arising from linked services do not lead to financial accidents for Naver Pay.
In addition, the FSS will closely examine the internal control system and plans to issue improvement guidelines for any inadequate areas. However, considering the shorter history compared to traditional financial sectors, they are expected to take follow-up measures in a consulting nature rather than simply applying pressure. An FSS official stated, "If deficiencies are found in Naver Pay from an outsider's perspective, we will help improve them, but if any violations are discovered, we will take punitive action."