Open banking service set to debut on Oct. 30
Customers will be able to manage all of their bank accounts using just one app operated by one of the country’s 10 leading banks from Oct. 30 as the government will run a new financial data management and operating system called “open banking” on a trial basis.
Under the new system, using only one app, customers will be allowed to check all their accounts at different banks and wire cash between them in a faster, more convenient way.
According to the Financial Services Commission (FSC), 18 banks and 128 fintech firms applied to make their services available via the comprehensive joint payment system.
The full-scale implementation of open banking will take place after the pilot test of the 10 banks.
Based on an application programming interface (API), an intermediary program that enables various software to interact, the new system will enable both commercial banks and fintech firms to have equal access to financial data regardless of whether they have an online platform.
The apps from the 10 banks will have an “open banking” icon, which users can click to input the account numbers of each bank account.
This will make cash wiring simpler and faster because customers under the current system are not able to use different bank-operated apps interchangeably.
The FSC plans to expand the service to fintechs in December, when customers will be able to wire money with a fee of up to just 50 won ($0.04).
The amount is 10 percent of the current 500 won customers have to pay for each transfer made between different banks.
The new system will boost tighter integration among various industries, according to Suh Jeong-ho, head of digital finance research center at Korea Institute of Finance.
“The competition between traditional financial services firms — mostly banks — and fintechs will become more heated in the coming months, given data managed by each financial firm is no longer an asset without value-added customer services,” he said.
Continued collective efforts are inevitable because through the new system, banks and fintechs are now in direct competition with one another.
Banks will have to provide services that best meet customer needs now that data sharing has been implemented because access to data itself is no longer a strength.
To be eliminated from the competition will be firms that fail to effectively pinpoint the customers’ needs and adapt their business models in a swift and agile manner.
“Many experiments should be conducted to produce constructive failures through which industry figures will learn and adjust their method of finding the right path toward the efficient implementation of technology,” Suh said.