The Financial Services Commission decided on April 1 to make an exception to the fintech research institute of Kakao Bank, which is scheduled to be established next year, with regard to network separation. Under the circumstances, fintech innovation in South Korea is expected to speed up.
At present, South Korean financial and fintech companies must maintain intranet systems and external communication networks, such as the Internet, separately. It has been pointed out that this regulation is not suitable in terms of work efficiency when remote work is required due to reasons such as the ongoing spread of COVID-19.
According to those in the industry, network separation acts as a hindrance to the development of innovative services although it is effective in terms of security. Especially, it has been difficult for developers to utilize open sources and cloud computing as internal servers must be physically separate from external communication networks.
They have called for a change such as network separation exception limited to development activities. “Innovative technologies such as open source libraries cannot be utilized under the current regulations,” said a developer in the local fintech industry, adding, “Work efficiency can be boosted if terminals used for development purposes and leading to no customer information leakage can be excluded from the regulations.”
In addition, those in the industry say that data-level network separation can be effective in terms of efficiency and security alike. According to the current regulations, a network must be divided into internal and external networks, general and confidential data must be stored in the former, and data utilization analysis tools must be located in the latter.