As the financial sector expands its use of AI, regulators' approach to managing security and internal controls is becoming more distinct.

The Financial Services Commission decided to exempt sanctions if minor system disruptions occur during AI security tests or emergency security patches, as long as certain conditions are met. It aims to lower the burden so firms can respond proactively to AI security threats. It set rapid recovery and consumer protection measures as prerequisites.

The Financial Supervisory Service will also intensively inspect the status of implementation of IT basic controls in the financial sector in the second half. It urged the banking sector to build an internal control system for safe adoption of AI. Basic IT management such as program change management, performance management and access-rights management has emerged as a key task for preventing financial incidents.

The savings bank sector has also entered a stage of needing to clarify each executive's responsibilities and management duties as companies with assets of 700 billion won or more are brought fully into the accountability structure framework. Across the financial sector, the trend is strengthening of allowing digital innovation while requiring tighter responsibility and control.

• FSC: Minor system disruptions during efforts to strengthen AI security in the financial sector will be exempt from sanctions • FSS to intensively inspect IT basic controls in the financial sector in the second half • FSS urges banks to build AI internal-control systems • 'No exceptions to accountable management'... savings banks to fully introduce accountability structure framework

As this drive to strengthen AI and IT internal controls becomes clearer, a personal data leak at Woori Bank has again brought accountability for management into focus.

It was confirmed that 17,551 cases of personal data that an external developer in charge of Woori Bank's NFT platform project had stored arbitrarily were leaked due to an employee's negligence. The leaked information included user nicknames and connected information (CI). Woori Bank said it blocked access to the information and will conduct a full survey of the developer's personal data management status.

Other banks also continued moves to advance technology. KakaoBank had research results in financial AI security, including detection of prompt attacks and verification of financial calculation errors, recognized at international academic conferences. Jeju Bank applied for a patent for core technology for an 'AI CFO' that combines corporate ERP data and financial data to predict future cash flows.

• Woori Bank leaks 17,551 personal data records during NFT platform outsourcing • KakaoBank posts a string of results at international academic conferences for financial AI security research • Jeju Bank applies for patent for AI-based cash-flow forecasting model

Korea Exchange, marking the 30th anniversary of the launch of the KOSDAQ market, is speeding up efforts to improve the market's structure. The exchange decided to push to introduce a segment tentatively named 'KOSDAQ Select' and to strengthen delisting rules to fix a structure in which strong and weak companies are mixed in one market.

It will also strengthen post-listing management for technology-special listing companies. It will make disclosure of a corporate value-enhancement plan a condition for deferring delisting requirements. It will also subject companies to substantive review if they change their main business purpose within 5 years of listing.

It also plans to lay the basis for publishing a list of low-PBR companies to encourage resolution of market undervaluation. Exit standards will also become stricter. A KOSDAQ-listed company's market capitalisation can enter management and delisting procedures if it stays below 20 billion won for a certain period or if its share price remains below 1,000 won for 30 consecutive trading days. The exchange expects around 50 companies could be delisted from KOSDAQ this year for failing to meet the market-capitalisation requirement under the tightened standards.

• Exchange strengthens management of technology-special listings, lays basis to publish low-PBR companies • Roadmap for the next 30 years of KOSDAQ begins... segment introduction and stronger exit rules • Exchange: Around 50 companies expected to be delisted this year for failing to meet KOSDAQ market-capitalisation requirement

The financial sector is also seeing second-half management strategies, governance and digital transformation issues emerge as expectations grow for first-half results.

The combined net profit of the four major financial holding companies is expected to exceed 11 trillion won in the first half of this year, setting another record for a half-year period. Bank interest income is holding steady. Improving results at securities affiliates from a stock market boom has added to expectations of a recovery in non-bank businesses.

KB Financial Group narrowed down the candidates for next chairman to 6 and entered a full succession process. Whether Chairman Jong-hee Yang (양종희) will serve another term and the possibility of applying governance improvement measures emerged as key variables.

Shinhan Financial Group held a management forum for the second half and urged restoration of market position and stronger execution capability for an artificial intelligence transition. Woori Bank is pursuing both stronger sales capability and internal controls. It is integrating its retail sales organisation on a data basis and unifying domestic and overseas inspection functions.

Internet-only banks are maintaining the principle of non-face-to-face operations. Their scope of work has widened as some face-to-face services were allowed, including debt restructuring counselling, corporate loan screening and original document verification. As results improve, the next axis of competition in the financial sector is shifting to governance credibility, AI execution capability, sales efficiency and inclusive finance.

• Who will be KB Financial's next chairman?... attention on whether Jong-hee Yang will serve another term amid governance variables • Shinhan Financial holds second-half management forum... urges stronger AX execution • Woori Bank reorganises to strengthen data-based sales and internal controls • First-half net profit at four major financial holding companies to top 11 trillion won... record high seen • Scope of face-to-face work for internet banks widens... debt restructuring and corporate loan screening allowed

In overseas financial markets, tokenisation, digital asset custody and expansion of big tech financial services emerged as major trends.

The IMF warned that if financial assets and liabilities move to distributed ledgers, the location where financial risks arise could change, along with settlement speed and costs. It said that in emerging markets, as tokenisation spreads and speeds up cross-border fund movements, risks could rise including volatility in capital inflows and outflows, currency substitution and weaker policy effectiveness.

Standard Chartered secured EU MiCA and an electronic money institution licence and decided to expand its European digital asset custody services, with Luxembourg as its base.

Elon Musk's X unveiled 'X Money' to some early users, featuring an annual deposit interest rate of 6 percent, 3 percent cashback and peer-to-peer remittances, signaling competition with PayPal and Cash App.

In the United States, Micron expanded examples of corporate participation by contributing $250 million to 'Trump Accounts', a child asset-building scheme.

Mirae Asset Securities said it will take legal action, calling a Bloomberg report untrue that there was a communication error during the SpaceX IPO subscription process. In global financial markets, regulatory, trust and competitiveness issues are emerging together as digital asset infrastructure and big tech financial services move into the institutional financial system.

• IMF warns tokenisation could reshape payment structures... emerging-market capital-movement risks rise • After Asia and the Middle East, now Europe... Standard Chartered to expand digital asset custody across the board • Micron donates 390 billion won to Trump Accounts... 'largest-ever' corporate contribution • Mirae Asset Securities rebuts Bloomberg report on 'SpaceX IPO subscription error' • Annual 6 percent deposit, 3 percent cashback... Elon Musk's 'X Money' challenges PayPal • Micron donates 390 billion won to Trump Accounts... 'largest-ever' corporate contribution

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

KB Financial Group continued its shared-growth finance moves by providing 6.9 trillion won in financial support for vulnerable groups and small merchants. KB Kookmin Bank launched 'KB AI Dev Center', which uses AI from planning through development and verification, speeding up an AX transition in development work. Shinhan Bank introduced an escrow service dedicated to foreign direct investment, improving financial convenience for global investors.

• KB Financial provides 6.9 trillion won in financial support for vulnerable groups and small merchants • Using AI from planning through development and verification... KB Kookmin Bank launches 'KB AI Dev Center' • Shinhan Bank launches escrow service dedicated to foreign direct investment

Woori Financial Group strengthened support for neighbourhood commercial areas by relocating the Woori Smile Microfinance Foundation's Seoul branch to Changsin-dong and expanding in-person counselling. Woori Bank expanded offline payment locations for Samsung Wallet Money and Points to Daiso and CU, broadening everyday-use simple payment services. Hana Bank continued its shared-growth finance moves by pushing 1.3 trillion won in financial support for small merchants and borrowers who repay faithfully.

• Woori Financial relocates Smile Microfinance hub to Changsin-dong... strengthens support for neighbourhood commercial areas • Woori Bank expands payment locations for Samsung Wallet Money to Daiso and CU • Hana Bank pushes 1.3 trillion won in support for small merchants and faithful repayers

In the payments industry, expansion of infrastructure continued, targeting overseas expansion and payment demand from foreign visitors to South Korea. NHN KCP held a briefing on entering Japan with KOTRA, and Danal installed foreign payment kiosks at K-beauty medical hubs.

• NHN KCP holds briefing on entering Japan with KOTRA • Danal installs foreign payment kiosks at K-beauty medical hubs

In the fintech and lifestyle finance platform industry, expansion of payment and data-based services continued. Toss launched 'Toss One Shinhan Card' specialised for Face Pay, and Naver Pay introduced a QR instant payment service for maintenance fees. BankSalad was selected for a government MyData support project and moved to advance data-based financial services.

• Toss launches 'Toss One Shinhan Card' specialised for Face Pay • Naver Pay opens QR instant payment service for maintenance fees • BankSalad selected for government MyData support project