Kakao Bank to Pilot Fintech Research Center in Second Half Following 'Network Separation Exception'

Official Launch Expected as Early as the First Half of Next Year

[Asia Economy Reporter Kim Hyo-jin] Korea Kakao Bank (KakaoBank) plans to pilot the operation of an internal 'Financial Technology (Fintech) Research Institute' within this year, based on the financial authorities' special exemption for network separation. KakaoBank aims to leap beyond an IT (Information and Communication Technology)-based internet-only bank to become a leading company in financial innovation through the development of various non-face-to-face innovative technologies.

According to the financial sector on the 14th, KakaoBank plans to establish a financial technology research institute, equivalent to a corporate-affiliated research center, in the second half of this year and begin pilot operations. Depending on the progress of the pilot operation, KakaoBank intends to officially launch the Financial Technology Research Institute as early as the first half of next year.

A KakaoBank official said, "Specific plans for personnel deployment and operations are currently under review," adding, "We will conduct research on various types of IT technologies that can be linked with finance, including non-face-to-face technologies."

The KakaoBank Financial Technology Research Institute plans to actively promote technological research collaboration with fintech companies, related research institutions, and regtech companies. Regtech is a compound word of 'regulation' and 'technology,' referring to information technology that facilitates corporate regulatory compliance using artificial intelligence (AI).

Additionally, the KakaoBank Financial Technology Research Institute plans to focus on research into pseudonymization and anonymization technologies during financial transactions, as well as the development of augmented reality (AR)-based non-face-to-face video interfaces. It also plans to pursue ▲ AI and multimedia technology development for intelligent handling of customer center consultations ▲ advancement of speaker authentication technologies during financial transactions via AI speakers and automobiles.

This attempt by KakaoBank became possible after the Financial Services Commission recognized exceptions to the network separation regulation as part of the financial regulatory sandbox (a financial service pilot operation system) on the 1st. Financial companies are required to separate and block internal communication networks from external networks such as the internet through a network separation environment, and this special exemption was granted.

The financial authorities expect that the KakaoBank Financial Technology Research Institute will serve as a foundation for creating new financial innovation services by broadly conducting research and development of digital new technologies. They also anticipate this to be an opportunity to review exceptions to network separation and risk mitigation measures from a financial security perspective, considering changes in working environments due to COVID-19 and the rapid shift to digital.

KakaoBank recorded a net profit of 13.7 billion KRW last year, marking its first profit since its launch in 2017. Last month, KakaoBank decided not to appoint a successor to former co-CEO Lee Yong-woo, who left the company to enter politics, at the executive nomination committee and board of directors meetings.

Accordingly, KakaoBank transitioned to a sole CEO system under Yoon Ho-young. Recognized as an expert in IT and finance convergence, CEO Yoon expressed his ambition, stating, "We will realize 'Kabang First,' where KakaoBank comes to mind when thinking of 'mobile finance' through service expansion and enhanced customer experience."

Yoon Ho-young, CEO of Kakao Bank

This content was produced with the assistance of AI translation services.