"Preemptive Check on Digital Financial Risks"…FSS Inspects Toss Security System and Others

Due to the nature of the electronic financial industry, comprehensive inspections focus on security and risk management status
Even the 'rapidly growing' Kakao Bank will be inspected within the year

[Asia Economy Reporter Kim Hyo-jin] The Financial Supervisory Service (FSS) has launched an inspection of Toss, operated by Viva Republica.

According to the financial sector on the 17th, the FSS began an on-site inspection of Toss on this day. The FSS prepared for the inspection by requesting preliminary data from Toss earlier this month.

The FSS plans to examine Toss's information technology (IT) sector, and since Toss is an electronic financial business operator based on financial technology (fintech), the inspection is effectively close to a comprehensive audit.

This is the first time Toss has undergone an on-site inspection by the FSS since its establishment in 2015.

As of the end of June, Toss is the leading domestic simple remittance company with 17 million subscribers. Toss currently operates about 40 services, including simple remittance, loan products, insurance products, and card comparison and sales.

Earlier this month, Toss acquired LG Uplus's electronic payment business division and launched 'Toss Payments,' an electronic payment gateway (PG) affiliate.

Toss previously established a subsidiary called 'Toss Insurance,' which functions as an insurance corporate agency (GA), and released 'Toss Insurance Partner,' an app exclusively supporting sales agents registered with the Life Insurance Association and the General Insurance Association.

Additionally, based on the Financial Services Commission's preliminary approval for banking business, Toss is preparing to launch the internet-only bank 'Toss Bank' in July next year.

The FSS is conducting this inspection based on the judgment that it is necessary to proactively check the operational systems, security, and risk management status amid the expanding entry of electronic financial business operators into the financial industry.

Inspection of Kakao Bank, the No.1 Internet-Only Bank, Also Planned Within the Year
Expected to Check Soundness Management Amid Rapid Growth

The FSS also plans to begin an inspection for the management evaluation of Kakao Bank, the country's top internet-only bank. The FSS intends to conduct the inspection by the end of the year at the latest and is reviewing specific schedules.

As Kakao Bank continues rapid growth driven by a fast increase in unsecured loans, the FSS plans to focus on checking the status of risk management related to soundness.

The financial authorities had deferred inspections of Kakao Bank for three years since its launch in July 2017. The FSS originally planned to conduct the inspection immediately after the deferral period ended in July but postponed it due to the impact of COVID-19 and other factors.

As of the end of June, Kakao Bank's Basel III-based capital adequacy ratio (BIS) stands at 14.03%, exceeding the financial authorities' recommended level of 14%. Its delinquency rate remains low at 0.22%.

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