"Regulatory Framework for Big Tech Financial Services Needs Improvement"

Korea Institute of Finance Report
Unforeseen Risks May Arise Due to Big Tech Platform Growth

[Asia Economy Reporter Sunmi Park] As discussions on regulatory improvements for online platforms and big tech continue among competition authorities in major countries such as the United States and the European Union (EU), advice has emerged that South Korea also needs to improve its regulatory framework regarding big tech’s provision of financial services.

On the 16th, Lee Soon-ho, a research fellow at the Korea Institute of Finance, introduced regulatory improvement measures for big tech currently being discussed in the US and Europe in his latest report. In the US, a package of five antitrust bills targeting major platforms has been proposed, and the Federal Trade Commission (FTC) has filed antitrust lawsuits against big tech platforms, signaling an overall shift toward strengthening regulations on big tech platforms.

The EU is also strengthening regulations on online platforms performing so-called 'gatekeeper' functions through the proposal of digital tax legislation and the release of a draft Digital Services Act package. The UK has established a Digital Markets Unit within the Competition and Markets Authority (CMA) to oversee digital market regulations, and discussions are underway to elevate this unit to an independent government agency due to the diverse range of tasks involving big tech platforms.

Research fellow Lee advised, "South Korea’s financial authorities also need to consider effective ways to incorporate big tech companies entering financial platforms within the framework of financial regulation and supervision."

Regarding the background, he explained, "As big tech platforms rapidly grow by entering the financial sector, structural changes in finance are expected, raising concerns about various risks previously unencountered. Issues such as regulatory blind spots related to unfair excessive competition and the separation of finance and industry, as well as risks arising from the blurring boundaries between financial and non-financial sectors, may emerge."

He suggested considering measures such as including information technology experts on the boards of existing financial companies, and advised that big tech companies should hold appropriate licenses to directly engage in financial business or provide services in cooperation with financial institutions.

With the expansion of big tech’s entry into financial services and financial platforms, he emphasized the need to strengthen supervisory functions within financial authorities that promote fair competition to effectively block abuse of market dominance and encourage competition and innovation. Additionally, he advised, "It is necessary to establish an efficient cooperation system among domestic regulatory authorities overseeing various operations conducted by both domestic and global big tech, and to enhance international cooperation among foreign regulatory authorities."

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