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FinTechs belonging to this category offer asset and portfolio management services via an internet platform or software programs and usually manage and dispose of the assets of their customers long or short term according to their specifications without actually holding the property or the possession of those assets. FinTechs, which provide information about and access to overnight or time deposit accounts at national and foreign banks and which execute the transactions to these accounts, also belong to this category. Some FinTechs however only act on request of the customer.
Aside from that some FinTechs offer software or internet solutions enabling users to manage and plan their personal finances on their own by providing graphics, overviews and compilations of their financial data and sometimes indicating financial risks or opportunities, but without actually managing the assets.
Introduction
Attitude of the country towards modern asset and portfolio management services
With the robust growth of FinTech, FinTech companies are actively providing asset management services, and, increasingly, financial companies are partnering with FinTech companies to provide asset management services. The financial regulators also have an optimistic outlook, expressing that with the introduction of the MyData business under the amended Credit Information Use and Protection Act, it would be possible for businesses to provide advanced wealth management services by analysing consumption patterns and other data.
Legal affairs
Obligations and requirements to provide asset and portfolio management, or ancillary services described above
The business of managing another person’s assets may constitute a discretionary investment business or collective investment business under the Financial Investment Services and Capital Markets Act (“FISCMA”). In general, asset management services other than funds do not collect and manage investors’ funds, but rather manage investment assets for each investor, taking into account the investor’s financial standing and investment purpose, etc. Such asset management falls under the definition of discretionary investment business under the FISCMA. However, if the scope of services does not rise to the level of management, and only investment advice is provided, this would be considered an investment advisory business under the FISCMA described under Section c below.
Under the FISCMA, "discretionary investment business" means the business of acquiring, disposing of, and managing financial investment instruments, etc. on behalf of investors, taking into account the financial standing, purposes of investment, etc. of such investors, with authorization from such investors to make investment decisions at the company’s discretion. Investment decisions refer to decisions relating to the asset type, acquisition, disposition, methods of acquisition or disposition, quantity, price, timing, etc. In order to manage investors’ assets and make investment decisions on their behalf, one must be registered with the Financial Services Commission (“FSC”) as a discretionary investment business under the FISCMA.
To register as a discretionary investment business, the applicant must meet the following requirements: (i) the applicant must be a joint-stock corporation under the Commercial Act or a foreign equivalent of a discretionary investment business entity which has established a branch or other business office necessary for the execution of discretionary investment in Korea. However, if the foreign discretionary investment business entity directly conducts business with Korean residents from a foreign country or using means of communication, no local presence is necessary; (ii) depending on the client base, different minimum capital requirements