The South Korean government has poured roughly 10 billion won (approximately $7.5 million) into supporting fintech companies’ development of Innovative Financial Services over the past four years, but more than one in five of the supported projects has failed to reach the market. Grants alone for projects that never launched exceed 1.3 billion won (approximately $970,000).
According to the National Assembly Political Affairs Committee’s “2027 Budget Review Report on South Korea’s Financial Services Commission” released on the 12th, the FSC executed 9.92693 billion won (approximately $7.4 million) in testbed support budget under its digital financial innovation support program from 2023 through October of this year. Of the 62 Innovative Financial Services projects, 14 (22.6%) have yet to launch their services. Grants paid out for unlaunched projects totaled 1.30799 billion won (approximately $980,000).
The Testbed Cost Support Program provides development and testing costs—such as building security systems and cloud infrastructure—to companies designated for Innovative Financial Services or selected for consigned testing. It subsidizes 50–80% of project costs from the national treasury, up to a cap of 120 million won (approximately $90,000) per company per year.
The problem is that a significant number of recipients failed to bring services to market within their designation periods despite receiving the funds. CB Financial Solutions was designated as an Innovative Financial Service in 2020 for its “one-click distributed deposit and savings service” and received 75 million won (approximately $56,000) in 2023 as well, but its designation period ended without a launch. CPLabs received 119.6 million won (approximately $89,000) for a blockchain-based non-face-to-face identity verification service but failed to commercialize it, and A-Panda Partners, which pursued a tokenized securities trading platform for real estate mortgage-backed loans, received 103.3 million won (approximately $77,000) but did not introduce a service before its designation period ended last year.
The absence of any legal basis for penalizing long-term non-launching was also flagged. The current Financial Innovation Support Special Act has no provision allowing the revocation of designation for operators that fail to launch services for an extended period. Kim Sang-hoon, a lawmaker of the ruling People Power Party, proposed an amendment in July that would allow designation to be revoked if a service is not launched within two years of designation without justifiable grounds, but the bill remains pending at the National Assembly Political Affairs Committee. By contrast, the regulatory sandboxes operated by South Korea’s Ministry of Science and ICT and Ministry of Trade, Industry and Energy already have grounds to revoke temporary permits if a business is not launched within two years of approval.
Criticism also emerged that subsidies flow repeatedly to certain companies. According to data the FSC submitted to the National Assembly, among 33 companies that received testbed cost support, nine companies supported three or more times received a cumulative 2.93 billion won (approximately $2.2 million), accounting for 48.2% of the total Innovative Financial Services support over the past four years (6.082 billion won, approximately $4.5 million). Bestfin received about 149 million won (approximately $110,000) over two years—82.73 million won (approximately $62,000) in 2023 and 66.63 million won (approximately $50,000) in 2024—for a project designated in July 2023, but has yet to launch a service. Banksalad received additional support for a new project in 2025 even though a project it received a grant for in 2023 remains unlaunched.
The low launch rate for Innovative Financial Services is not a new issue. According to the FSC, as of June this year, only 33% of designated services had launched within one year of designation, and 91 services had not launched even two years after designation.
| Category | Figure |
|---|---|
| Testbed support budget over the past four years (2023–October 2026) | 9.92693 billion won (approximately $7.4 million) |
| Number of supported projects | 62 |
| Number of unlaunched projects | 14 (22.6%) |
| Grants for unlaunched projects | 1.30799 billion won (approximately $980,000) |
| Cumulative support for nine companies supported three or more times | 2.93 billion won (approximately $2.2 million), 48.2% of total support |
Note: Based on the 2027 Budget Review Report and data submitted by South Korea’s Financial Services Commission to the National Assembly Political Affairs Committee.
Kwak Hyun-joon, chief expert member of the Political Affairs Committee, said, “Support criteria and the performance management system need to be supplemented,” and added, “We need to reexamine the validity of repeated and long-term support for specific companies.”
The case illustrates loose performance management of regulatory sandbox-style programs funded by government money. Because Innovative Financial Services is a system that helps new businesses enter the market by deferring or exempting financial regulations, if development subsidies do not lead to actual launches, the effectiveness of deregulation itself could be undermined. The structure in which funding concentrates on repeat beneficiaries also raises concerns that it could narrow the room for new entrants. The key questions going forward are whether the National Assembly will resume discussions on an amendment clarifying the requirements for revoking designation, and how the FSC will revise its performance management indicators and support re-review criteria.