Thanks to the Special Case for Network Separation, Kakao Bank Begins Innovation Experiment in the Second Half (Comprehensive)

Financial Technology Research Institute Second Half Pilot Operation
Official Launch Expected as Early as First Half of Next Year

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

According to the financial sector on the 14th, KakaoBank intends 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, KakaoBank plans to officially launch the Financial Technology Research Institute as early as the first half of next year.

A KakaoBank official stated, "We are currently reviewing specific plans for personnel deployment and operations," 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 will focus on researching pseudonymization and anonymization technologies in financial transactions and developing 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 initiative by KakaoBank became possible following the Financial Services Commission's recognition of an exemption from network separation regulations on the 1st, as part of the financial regulatory sandbox (a system for pilot operation of financial services). Financial companies are required to separate and block internal communication networks from external networks such as the internet, and this exemption was granted for that requirement.

The financial authorities anticipate 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 expect this to be an opportunity to review exceptions to network separation and risk mitigation measures from a financial security perspective, considering changes in work 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. As of the end of last year, KakaoBank had 11.28 million customers, with deposits and loans amounting to 20.7 trillion KRW and 14.9 trillion KRW, respectively.

Last month, KakaoBank's Executive Candidate Recommendation Committee and Board of Directors decided not to appoint a successor to former co-CEO Lee Yong-woo, who left the company to enter politics. Accordingly, KakaoBank transitioned to a single CEO system under CEO Yoon Ho-young.

CEO Yoon, regarded as an expert in IT and finance convergence, expressed his ambition, stating, "With the expansion of services and enhanced customer experience, we will realize 'Kabang First,' where KakaoBank comes to mind first when thinking of 'mobile finance.'"

Yoon Ho-young, CEO of Kakao Bank

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