KB Kookmin Card may become the first credit card operator in Korea to introduce the Blockchain technology for its personal authentication service.
When the personal verification system is successfully rolled out for general use, it will replace the certificates currently used for financial services, which need to be renewed every year, bringing about a drastic change in the credit card industry in Korea.
According to financial industry sources on Oct. 23, KB Kookmin Card, in partnership with Bitcoin exchange service startup Coinplug Inc., will release a Block Chain-based personal authentication service for mobile financial transactions in mid-November. It will be the first of its kind in Korea, the company claims.
Block Chain technology is a public ledger of digital currencies where all participants have access to data blocks, or information, on financial transactions, rather than having a centralized ledger managed by a reputable intermediary such as a central bank. It is considered one of the most advanced Fintech, or financial technology, systems and provides high security for online transactions. KB Kookmin Card’s Block Chain-based verification technology will first be implemented in its mobile credit card app, simplifying the current system that requires additional personal authentication steps for logging in, registering new credit cards and making mobile payments of 300,000 won ($264.08) or above, the company said.
Market observers predict other banks and financial companies will soon follow suit of KB Kookmin Card and the Block Chain-based personal authentication system will quickly replace the conventional financial transaction process in Korea that has posed an inconvenience for consumers, requiring online or mobile payment service users to have a verification certificate issued and renewed every year.
The current, complicated verification process, has been blamed for shunning foreigners living in Korea and elders from the rapidly growing mobile and online market places in a country that considers itself one of the world’s most wired countries.
KB Kookmin Card’s new Block Chain-based system will allow its mobile credit card users to have personal authentication certificates issued just once and enter a six-digit pass code, shorter than the current 10-digit code.
The credit card firm also expects the new system will lower its administrative expenses in issuing personal authentication certificates and managing customer data through an intermediate company since the Block Chain network involves all users sharing transaction data, requiring no third-party institution for verification. Also, it is considered hac-proof because it is difficult to forge transaction data.
Currently, Korea’s major commercial lenders including Shinhan Bank, KEB Hana Bank and KB Kookmin Bank are taking part in the R3 CEV project, a global consortium of financial institutions in research and development of Block Chain usage in the financial system in a move to prepare to implement the new verification technology.
KB Kookmin Card is getting the spotlight in the credit card industry by introducing products that maximize synergy with KB Kookmin Bank.
Among them is the KB Kookmin ISA Card, which offers mileage for those who have subscribed to KB Kookmin Bank's individual savings account (ISA). Competition has been heating up in the industry to attract subscribers to ISAs where diverse financial products are attached to the account while offering the subscribers tax cuts. The product reflects KB Kookmin Card's plan to enhance its competitive edge by offering differentiated products.
The entrance of the head office of KB Kookmin Card in Naesu-dong, Seoul.
