Korean banks set to test run open banking system on Oct. 30

[Graphics by Song Ji-yoon]

South Korea is readying to test a singularized banking platform later this month, enabling consumers to run tasks in different banks on one mobile platform.

Under the project led by the Financial Services Commission since February, 10 commercial banks and fintech firms in Korea will test out their common platform on Oct. 30 before launch of full service in December.

The goal is to allow customers to manage multiple bank accounts and withdraw and transfer money from a single app. Users can enjoy the trial service after input of their account numbers. The system will be upgraded to simplify to access procedures.

After the formal opening of the platform, online banks and fintech startups will be invited to join. As of Sunday, a total of 146 companies filed for a preliminary application to join the service and are under review.

Among the applicants are Viva Republica, the operator of popular mobile payment service app Toss, Rainist, which operates online personal financial management platform Banksalad, and Naver Pay, mobile payment service of the country’s internet giant Naver.

Open banking is a system in which banks allow third parties such as fintech startups to have access to bank accounts and payment network. With the system, the FSC aims to bring innovative changes to the payment culture and industry by widening consumer choices beyond traditional lenders.

Currently, only traditional banks can access to the country’s payment network for money transfer services, allowing them to have access to their own bank accounts’ data only. This means that fintech firms must forge a partnership with each bank to provide payment services through their own platforms and have to pay commissions to partner banks.

The new system is unlikely to bring about immediate changes as the transition has not been as fast as expected when similar initiative was introduced in the United Kingdom in January last year.

Only one in four have heard of open banking, according to a survey of 2,000 people by a local company, and worse, only one in five of those who had heard of open banking said they knew what it meant or entailed, according to the Financial Times early this year.

[ⓒ Maeil Business Newspaper & mk.co.kr, All rights reserved]