Financial authorities expanded the scope of eased network separation rules for AI use to secondary financial institutions and electronic financial business operators.

The selection quota will expand from 10 companies to up to 15. Application thresholds for financial companies were lowered to total assets of 2 trillion won and at least 300 full-time employees, from total assets of 10 trillion won and at least 1,000 employees.

Selected financial firms will be able to detect and fix security vulnerabilities by using external AI and security SaaS after putting alternative control measures in place.

The industry expects wider use of AI and cloud services to speed up work automation, data use and development of new services.

Some financial firms are cautious about participating even though they meet eligibility requirements, unlike large firms that are reviewing participation.

AI use requires in-house capabilities such as security systems and specialist staff. That has led to the view that regulatory easing will not immediately strengthen AI competitiveness for all financial firms.

Some also point to the possibility that digital competitiveness gaps among financial firms could widen further if regulations are eased more for firms with AI and security capabilities.

• The gap could widen depending on AI capabilities... industry reaction to eased financial network separation • Financial Services Commission eases network separation rules for a second time... expanded to secondary financial institutions and electronic financial business operators

The AI race in the global finance and fintech industry is shifting from simple technology adoption to proving actual profitability and productivity.

U.S. Bank set out a core principle of selecting tasks that can be repeatedly used before applying AI, and building systems to measure results and reuse them.

In the investment market, global fintech investment rose to $103.1 billion (about 140 trillion won) in the first half of this year. Funding in the second half is expected to focus on financial infrastructure areas such as AI and stablecoins and digital assets.

Some analysis says large-scale layoffs in the fintech industry are not simply the result of AI directly replacing jobs. It says worsening profitability, cost cuts and normalization after past overhiring are also working together.

As investment in AI data centres increases, permitting delays, local opposition and lawsuits are emerging as new credit risks for financial firms. Moves are also appearing to tighten loan terms and spread risks.

In South Korea, the shift to so-called actionable AI under way in global finance is spreading, including rebuilding systems that link chatbots and 상담bots to AI agents to support actual work processing.

• Starting with task selection, not AI technology... U.S. Bank's 6 execution principles • Fintech draws 140 trillion won... infrastructure and AI seen as the battleground in the second half • Fintech layoffs, really because of AI? ... the reality is pressure to cut costs • Lawsuits and delays while building data centres... finance strengthens AI infrastructure risk management • KT, Woori Bank begin rebuilding AI chatbot and 상담bot... finance AX spreads

Banks' support for small business owners is diversifying beyond simple funding to include credit assessment methods and management support.

Financial authorities introduced a small business-focused credit scoring model (SCB) that assesses business growth potential using non-financial information such as sales, industry and commercial area. Pilot operations started at 8 banks.

Support is expanding for adopting digital devices and for HR and payroll management for small business owners. Liquidity support is also continuing ahead of holidays, including new loans and maturity extensions.

With added support for cutting distribution costs and helping neighbourhood commercial districts, support for small business owners is widening beyond finance into non-financial areas such as digital transformation and management cost reductions.

• Taking a closer look at banks' small business lending 'calculation'... SCB use varies • Banks begin pilot operation of small business-focused credit scoring... preferential limits and rates • Hana Financial, SBDC and another group, 'Good Eggs' project... support for distribution costs • KB Kookmin Bank, 'Labor 365' payroll transfer event... offers up to 80,000 won • Hana Bank, supports small business digital transformation... up to 2 million won for 500 sites • KB Kookmin Bank, supports 1.52 trillion won for SMEs and small business owners for Chuseok

Despite consecutive policy rate hikes by the Bank of Korea, lending rates are moving at different speeds depending on product benchmarks and rate reset cycles.

As interest burdens rose, applications for rate cut requests at banks totalled 2,679,000 in the first half of this year, up 77 percent from the previous half. The acceptance rate fell instead.

With borrower burdens growing during rising rates, policy authorities also moved to strengthen the support base for ordinary people and vulnerable borrowers.

A bill extending financial firms' obligation to contribute to the Korea Inclusive Finance Agency through 2036 passed the National Assembly's Political Affairs Committee subcommittee. The obligation was set to expire on Oct. 8.

The Financial Services Commission plans to allocate 1.08 trillion won in next year's budget proposal to expand policy finance supply, including Haetsal Loan.

Regional support is also being strengthened. The Financial Services Commission, Gangwon Province and Shinhan Bank moved to set up the Gangwon Inclusive Finance Integrated Support Centre, which links finance, debt restructuring and welfare counselling.

In the private sector, support measures are continuing to lower the real burdens on vulnerable borrowers, including support for young people who repay Smile Microcredit loans faithfully and interest rate cuts on loans to mid- to low-credit borrowers.

• Policy rate raised twice... why are lending rates moving differently? • Financial Services Commission, Gangwon Province and Shinhan Bank set up Gangwon Inclusive Finance Integrated Support Centre • Shinhan Financial supports up to 3 million won for young people who repay Smile Microcredit faithfully • Extending financial firms' inclusive finance contribution duty to 2036... subcommittee passage • Financial firms' inclusive finance contributions near an end... permanent or extension • Financial Services Commission next year's budget 9.24 trillion won... focus on National Growth Fund and inclusive finance • Bank rate cut requests 2.68 million... first-half applications jump 77 percent • Kple cuts unsecured loan rates for mid- to low-credit borrowers by 1 percentage point... for new customers

As the government pushes a second relocation of public institutions to regional areas, conflict is also growing over whether financial public institutions will relocate. The government plans to finalise a relocation plan in the fourth quarter of this year and begin relocating lead institutions from 2027.

The Korea Finance Industry Union opposed uniform relocations of the Korea Development Bank, IBK Industrial Bank of Korea, the Export-Import Bank of Korea and NongHyup, and launched a general strike involving 30,000 people. It said the effects of the first relocation of public institutions should be verified first.

The Financial Supervisory Service labour union also voiced concerns that relocation would lead to an outflow of professional staff and weaken financial consumer protection and supervisory capabilities. It submitted a petition signed by 1,720 employees to the president.

The government also began reorganising policy finance institutions by integrating 5 facility management subsidiaries and 2 customer management subsidiaries of organisations including KAMCO, KDIC, KDB and KEXIM and KODIT by function.

With discussions on organisational reorganisation and relocation proceeding at the same time, financial sector backlash and organisational changes are expected to emerge as key variables ahead of finalising which institutions will relocate in the fourth quarter of this year.

• Financial Supervisory Service union: "Professional staff will leave if relocated"... 1,720 sign petition to president • Finance union opposes relocation of KDB, IBK, KEXIM and NongHyup... 30,000-strong general strike • Finance union opposes relocation of financial institutions... "Verify effects of first relocation first" • Policy finance subsidiaries to be merged... variables in relocation of financial public institutions

The digital asset industry's centre of gravity is shifting from technology experiments to actual commercialisation using payment, settlement and financial infrastructure.

The Korea Fintech Industry Association and XRPL Korea moved to support companies by linking ideas to proof-of-concept and actual service implementation, focusing on payments and remittances, stablecoins and RWA tokenisation.

Danal is also pushing commercialisation by teaming up with virtual asset business operator Inex to integrate stablecoin payments and real-time settlement into its existing payment gateway merchant network.

Hecto Financial is also emerging as digital assets become a new growth engine for existing payment companies, as the possibility of expanding business using global stablecoin payment and settlement networks is highlighted.

In the United States, a move is also gathering pace for 39 state bankers associations to push a joint blockchain network, the Bankchain Alliance, and directly apply digital asset technologies such as tokenised deposits, stablecoins and automated settlement to regulated bank infrastructure.

• Korea Fintech Industry Association and XRPL Korea cooperate to support digital asset commercialisation... PoC and global linkage • Danal pushes stablecoin payments with virtual asset business operator Inex • "Hecto Financial, stablecoin benefits becoming visible... record-high results expected" • 39 state bankers associations in U.S. join forces... push Bankchain, a banking blockchain network

As the cross-border remittance and payment market grows, competition for services targeting foreign customers is also expanding.

In global markets, fintech firms are emphasising convenience and speed, while banks are presenting account infrastructure, regulatory 대응 and reliability as strengths.

As cross-border payment infrastructure becomes more advanced, the focus of competition is expected to shift from simple remittances to comprehensive services spanning payments, settlement and everyday financial services.

• CrossENF launches remittance and payment service for foreigners • Cross-border payments' centre of gravity shifts... banks widen gap with fintech using accounts, regulation and trust

South Korea's capital market is entering a phase of overhauling its overall structure, from listings to delistings, recovery of investment funds and trading stability, amid a stock market rebound and moves to resume IPOs.

With rules on duplicate listings being refined, stalled IPO reviews are moving again. But recovery in investor sentiment remains slow, with weak share prices for newly listed stocks and low trading value.

On KOSDAQ, work is proceeding in parallel to enhance market quality. That includes strengthening delisting standards and improving the delisting system so firms that fall short of market capitalisation standards can move to KONEX if they meet certain requirements.

In the venture market, the securities industry decided to diversify exit structures that are concentrated on IPOs by 추진 a 1 trillion won secondary investment over 3 years.

Debate also continued over retail investor rules and trading stability. The government decided to keep ISA contract periods and contribution limits unchanged, and Nextrade introduced a volatility interruption mechanism to reduce price distortions from small-lot orders.

In the capital market, institutional improvements and debate are continuing over an overall virtuous cycle structure, from corporate entry and exit and venture fund recovery to retail investor rules and trading stability.

• IPO market stirs after ban on duplicate listings... investor sentiment recovery is 'not yet' • KOSDAQ firms below market cap can move to KONEX... delisting system improved • KOSDAQ cannot smile despite 'historic rebound'... tier system adoption and tougher delisting variables • Government keeps ISA contract period and contribution limit unchanged... 'stock price suppression prevention law' to be revisited in parliament • Nextrade introduces volatility interruption mechanism... prevents price distortions from small-lot orders • Securities industry to invest 1 trillion won in venture secondaries over 3 years... easing IPO concentration

Last week, the KOSPI raised expectations of settling above 7,000 on improved earnings and strong exports, but gains were restrained by uncertainty over global interest rates.

Volatility in the stock market expanded sharply, led by semiconductor shares, as concerns grew over additional rate hikes following hawkish remarks by the U.S. Federal Reserve chair.

Strong exports and corporate earnings supported the downside of the index, but foreign inflows and the outlook for U.S. inflation and rates acted as constraints on further upside momentum.

Whether the market rises further is increasingly likely to be driven more by the U.S. rate path and global liquidity conditions than by domestic fundamentals.

• [Stock market outlook] Fails to break 7,000 and returns to 'box market'... watch U.S. rates and inflation • Japan's 10-year yields hit 3 percent for first time in 30 years... AI-related shares weaken, weighing on stocks • Can KOSPI settle at 7,000 after rollercoaster stops... September direction • KOSPI plunges more than 3 percent on Fed chair's 'hawkish remarks'... slides to 6,500

Other major moves in the finance and fintech industry were also summarised.

In banking, internal work innovation is expanding, including directly applying generative AI to executives' work. Partnership-type products combining finance with distribution and lifestyle services are also producing results. Shinhan Financial emphasised trust and strengthening business competitiveness on its 25th anniversary and reshaped group-level growth directions.

• KB Kookmin Bank runs generative AI training for about 50 executives... directly writes business plans • Shinhan Financial marks 25th anniversary... Ok-dong Jin says "strengthen trust and business competitiveness" • Shinhan Bank's 'Olive Young SOL account' surpasses 100,000 accounts... strengthens lifestyle-finance combination

Moves also emerged to expand non-interest businesses by benchmarking overseas markets in preparation for changes to the retirement pension system and building a real estate asset management platform. In telecommunications, efforts also continued to broaden customer touchpoints combining finance and lifestyle services, including offering budget mobile phone plans linked to financial transactions.

• Hana Bank benchmarks Australian and UK pension markets ahead of introducing fund-type retirement pensions • Hana Bank launches 'Real Estate Value-up Platform'... cooperates with 5 specialist firms • Woori Bank launches budget mobile plan linked to financial transactions... supports up to 1 year of monthly telecom costs for 15GB

Moves also continued by financial firms to strengthen region-based sales by expanding comprehensive financial support for affiliates and operating local government treasury accounts, centred on regional hubs.

• NH NongHyup Financial launches 'NH Finance Hub' in North Jeolla... supports comprehensive finance for affiliates • IBK Industrial Bank of Korea reselected as Suwon City treasury bank... about 3.9 trillion won per year

Internet-only banks are widening product and service areas and expanding customer touchpoints through small business finance idea discovery and policy mortgage and card partnerships. In results, growth continued among internet banks, including Toss Bank posting its largest net profit for a half-year period in the first half.

• KakaoBank and K Bank join hands... discover small business finance ideas • KakaoBank offers 200,000 won to customers with confirmed 'Akkim-e Home Loan' • K Bank and BC Card launch 'Hidden Card'... 6 percent discounts at Naver, Kakao and Coupang Pay • Toss Bank posts first-half net profit of 58.9 billion won... largest for a half-year period

The fintech payments industry is expanding payment infrastructure into a wide range of offline and specialised sectors such as film festivals, law firms and gas stations, while also increasing the scale of account transfers and easy payment use. The trend is to broaden payment touchpoints in daily life and industrial sites by combining industry-specific partnerships with points and settlement services beyond simple payment functions.

• Toss 'Quick account transfer' tops 100 billion won in monthly transaction value... cumulative users 12 million • Naver Pay supports 'Npay Connect' payment infrastructure at an international film festival • Toss Payments partners with the Korean Bar Association... launches payment service for law firms • Naver Pay and SK Energy expand partnerships for gas station payments and points

In the fintech industry, moves also continued to apply new technologies such as AI agents and new payment and settlement methods to actual financial services.

Automation solutions are also expanding in corporate work areas, including AI-based business trip management, widening the application scope of finance and payment technologies.

As global platforms also move to build their own payment and settlement ecosystems, securing an ecosystem involving users and merchants is emerging as a key competitive edge in the instant payment market, rather than technology infrastructure itself.

• HabitFactory joins SKT 'Everyone's AI'... develops financial AI agent • Bizplay introduces business trip management solution at AI Government Innovation Conference • X switches U.S. creator payouts from Stripe to X Money • Instant payment success determined by 'ecosystem' rather than infrastructure