An open banking system was pilot launched in the banking sector on Oct. 30. During the pilot period, the government will conduct a comprehensive assessment of the system and make adjustments if necessary, before opening the system to fintech firms on Dec. 18.

At first, open banking will be offered by 10 banks and gradually expanded to the other 8 banks as well as fintech businesses.

The government recognized that financial payment services and data sectors have a significant potential for innovation, and announced on Feb. 25 this year its plan to establish an open banking system, which would allow fintech firms’ access to banks’ payment network through open API3 initiatives.

KEY FEATURES

• Lower transaction fees and enhanced user convenience

• The current fee of 400 won to 500 won per transaction will be lowered to about 40 won to 50 won for large service providers, and 20 won to 30 won for small- and medium-sized firms.

• Bank customers can choose any mobile banking application to manage all their accounts in a single application without having to use separate applications for different banks.

• Ensuring security and protection for consumers.

• Fintech firms attempting to participate in the open banking system are subject to a security check by the Financial Security Institute.

• The storage capacity of the current operating system will be upgraded from 4TB to 60TB before the system becomes open to fintech firms, and a 24-hour Fraud Detective System will closely monitor fraudulent activities and automatically shut down suspicious transactions.

The government expects that open banking will boost innovation and competitiveness in the financial sectors by introducing a comprehensive financial service platform, allowing fintech businesses to adopt open banking, and improving user experience for consumers.

The lowered entry barrier for fintech firms will lead to the provision and development of better services tailored to the needs of consumers at lower costs.

Banks will be able to diversity and widen their customer base, and grow as comprehensive financial service platforms. For consumers, increased ability to choose between different financial services and enhanced control over personal information will lead to improved user experience.

The government will ensure that open banking is operating in a stable and secure manner, and introduce new types of payment services, such as “My Payment” in order to encourage participation by more fintech businesses.

In 2020, the government will review an expansion of the open banking system to nonbank financial institutions, including mutual finance, savings banks and postal service.

The government also plans to diversify API functions and will review a possible expansion to data sectors through an increased connectivity with “My Data” service.

FSC Vice Chairman Sohn Byung-doo met with envoys from the Association of Southeast Asian Nations member countries and India on Oct. 28, and held talks on ways to further develop the financial industry in the region and increase cooperation.

At the meeting, Vice Chairman Sohn Byung-doo said that the FSC will increase cooperation with financial authorities in the ASEAN countries, support establishment and operation of foreign financial firms in Korea, and work to boost cooperation on financial infrastructure development.

Vice Chairman Sohn added that he hoped that Korea’s financial infrastructure and its advanced fintech industry will serve as a catalyst for improving financial inclusiveness and further integration of the ASEAN region.

The meeting was held prior to the upcoming commemorative summit between Korea and ASEAN, which will be held on Nov. 25-26 in Busan.

The government expects that the next month’s special summit will serve as an opportunity to deepen relations between Korea and ASEAN, and pave the way for realizing President Moon Jae-in’s New Southern Policy.