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The South Korean financial watchdog, the Financial Supervisory Service (FSS), urged financial firms to advance their digital transformation while prioritizing consumer protection.
The watchdog highlighted that digital and artificial intelligence (AI)-led innovation can boost financial productivity and benefits for customers.
However, despite the call for digital transformation in finance, the FSS said countermeasures must be put in place due to drastic changes in the financial services space, as well as new types of customer benefit-infringing factors, such as the growing digital divide and financial exclusion.
“Financial firms are urged to check risk factors stemming from IT-related accidents in the digital environment,” Lee Jong-oh, the FSS deputy governor for digital finance and IT, said. “Proactive steps should also be taken in the process of service development to protect customers.”
South Korea is among the Asian countries that have been at the forefront of digital transformation, particularly in digital payment and digital asset investments.
Earlier this year, the East Asian country saw a stricter approach to digital asset regulation. In February, the FSS announced it would increase oversight of the digital currency sector following a series of exchange issues, alleged price manipulation, and suspicious trading activities. The FSS Governor, Lee Chan-jin, said it would explore high-risk practices like whale trading and schemes that exploit digital asset exchanges.
In January, Google Play announced stricter regulations requiring all digital asset exchanges and wallet providers in South Korea to submit documents proving they have completed registration as virtual asset service providers with the Financial Intelligence Unit (FIU). At the time, popular crypto platforms like Binance and OKX faced immediate removal from the Google Play.
South Korea lags in AI investment despite high awareness
Although South Korea’s FSS is pushing for digital transformation in finance, a new report found that the country’s manufacturers are falling behind globally in AI investment.
Rockwell Automation stated in its “2026 State of Smart Manufacturing” report that, in a survey of 1,560 manufacturing companies across 17 countries, 90% said digital transformation is necessary to maintain competitiveness. Of the surveyed respondents, 95% of South Koreans agreed that digital transformation is important amid rapid changes in industrial technologies.
South Korean manufacturers believe that AI and machine learning (ML) are core technologies for smart manufacturing. 53% selected AI and ML as essential manufacturing technologies for driving business performance, but actual investment levels remained relatively low. The investment rate in AI and ML among South Korean manufacturers stood at 28%, below the global average of 50%. The share of operational budgets for industrial technology investment was also lower in South Korea at 22.8% compared to the 27.6% global average.
Among the biggest barriers cited was the high cost of adopting AI. 37% of the South Korean respondents said that costs were their main obstacle to implementing AI in manufacturing. Uncertainty over ROI accounted for 17%, while company policies and data security concerns each accounted for 13%.
Manufacturers globally are quickly moving towards smart manufacturing technologies, from pilot projects to full operational deployment, with 59% saying they are actively using them across operations. In comparison, 18% remains at the pilot stage. In South Korea, 43% of respondents said they have been using smart manufacturing technologies on a partial or large scale.
In addition, 34% of global manufacturers are using AI in their operations, and manufacturers expect more than half of their operations to receive AI support by 2030. Companies in South Korea identified AI and ML as key tech for performance generation, but only 27% of these firms have already implemented them.
The report identified several challenges in adopting AI and ML, including data utilization and cybersecurity.
Cybersecurity emerged as a major issue, with 41% of South Korean manufacturers reporting at least one cyberattack over the past year. They identified IT systems and enterprise networks as the most vulnerable at 39%, employee awareness and training at 36%, while remote access and connected devices at 29%. In terms of data utilization, only 34% of South Korean manufacturers effectively use manufacturing data, compared with 43% of global firms that use operational data.
South Korea needs to be more aware of the importance of AI and digital transformation, said Lee Yong-ha, president for Rockwell Automation Korea. “The share of operational budgets allocated to technology investment remains below the global average, making it increasingly urgent to accelerate investment in AI and smart manufacturing technologies to maintain global competitiveness,” he said.
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