Authorities "Agree on Deregulation of AI, Safety Measures to Be Established" [Future Finance Seminar]

"Emergence of Big Tech Platforms Increases Competition for Traditional Financial Firms"
Discussions Scheduled on Generative AI and Network Separation Regulation Easing

As technological innovations such as generative artificial intelligence (AI), cloud computing, and blockchain rapidly advance, opinions have emerged that the role of the financial industry is expanding while risks are also increasing. Financial authorities expressed agreement on the need for regulatory relaxation but emphasized their commitment to establishing safeguards to reduce financial risks.

At the 'Future Finance Seminar' held on the 8th at the Bankers' Hall in Jung-gu, Seoul, the Financial Services Commission and the Financial Supervisory Service stated, "We will discuss issues intertwined with technological innovation and finance together with the financial sectors."

The Financial Supervisory Service spoke about technological neutrality, stating that technological innovation should contribute to creating more beneficial value for consumers. They cited the emergence of big tech platforms as a good example of value creation driven by technological advancement. Shim Eun-seop, head of the Digital Innovation Division at the Financial Supervisory Service, said, "Big tech has a strong user base and has gained trust from consumers," adding, "Financial companies should be aware of the risk that if they lose customer trust due to incomplete sales (such as ELS), their financial product distribution channels could be replaced by platforms." He also emphasized that financial companies must prioritize customer interests and compete in service quality.

Regarding the development of generative AI, they expressed the need for regulatory relaxation. However, they stressed that establishing a risk management system must precede this, and positively evaluated financial companies for being the first to adopt such systems. They also emphasized efforts to establish safeguards against risks such as cyberattacks and actively support the expansion of diverse, high-quality training data to be used for AI learning.

On the 8th, participants are engaged in a panel discussion during the third session, "Technological Advances and Changes in Finance," at the 'Future Finance Seminar' held at the Bankers Hall in Jung-gu, Seoul.
[Photo by Jeon Youngju ange@]

Shin Sang-hoon, head of Financial Innovation at the Financial Services Commission, expressed a stance to support financial companies in collaborating extensively with non-financial services, including investments in fintech (finance + technology). Regarding generative AI and network separation regulations, he said discussions would continue through consultative meetings. On virtual assets and blockchain, he stated, "Although there are currently no concrete success cases, we will not close the door on future growth potential and plan to provide support," adding, "We will monitor the situation following the first phase implementation of the Virtual Asset Support Act and continue discussions."

There was also an analysis that generative AI technology will significantly contribute to the productivity of financial companies. Jo Young-seo, head of Digital IT at KB Financial Group, said, "As a result of testing AI adoption across all affiliates, it can bring 'democratization' in technology utilization and improve productivity by more than 50%." He also noted that KB Financial Group is making efforts in AI-related financial innovation, including completing the establishment of a group-wide generative AI platform.

Regarding cloud technology, opinions were raised that Korea's technology is lagging behind other countries while also carrying risks. Park Young-ho, partner at Boston Consulting Group (BCG), explained, "The mandatory physical network separation excessively reduces convenience for employees and customers," adding, "For over 20 years, the view that physical network separation is absolutely necessary to prevent financial information leakage has prevailed, but almost all countries except Korea allow financial companies to autonomously choose physical network separation." Physical network separation refers to blocking connections between major internal networks and external internet networks.

Lee Hyo-seop, head of the Financial Industry Division at the Korea Capital Market Institute, said, "Cloud technology accelerates innovation, but if errors occur, concerns arise about personal information exposure, generation of false information, legal risks, and job losses," adding, "Major financial companies use multiple clouds simultaneously, and if an error occurs in one place, the problem could exponentially worsen."

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