Open banking strong 50 days in

Financial Services Commission Chairman Eun Sung-soo, left, speaking with a Shinhan Bank employee about the bank’s open banking service at Westin Chosun Hotel in central Seoul Wednesday. [YONHAP]

Open banking is live after 50 days of testing, with 16 banks participating in the project, which allows for the seamless sharing of information with customers and service providers.

The system is not only expected to promote rapid innovation, but it is also seen improving convenience and the overall consumer experience.

It is hoped that a wide range of companies, from commercial banks to mutual fund companies, will ultimately participate in open banking.

“The payment system recently is undergoing a major change,” said Eun Sung-soo, Financial Services Commission (FSC) chairman, on Wednesday. “And at the center of this change is ‘openness.’”

He said fintech companies armed with fourth industrial revolution technologies are entering the payments business.

“As such, there has been an emphasis on the need for fundamental innovation in the financial payments system that, until now, has been managed in a restricted manner within banks,” Eun said. “Innovation in the payment systems with open access to data is being realized through open banking.”

Under open banking, customer information can be shared through the use of application program interfaces (API). This allows the customers to access all their financial information with one application, rather than having to log into each account separately.

Fintech companies will be allowed to develop a wide variety of services, including commission-free services, as the cost of accessing information will be lower under open banking.

An open banking event was held at the Westin Chosun Hotel in central Seoul on Wednesday and attended by major banks, including Woori and Shinhan, fintech companies such as Toss and start-ups like December, which uses artificial intelligence in offering investment consulting.

The open banking trial started on Oct. 30 with 10 banks. As of Wednesday, 16 banks are participating in the service as well as 31 fintech companies.

The FSC said it expects the number of companies taking part in the open banking to grow, with 177 having applied as of Tuesday.

Citibank is planning to begin open banking next month, while Kakao Bank is planning to have its own service within the first half of 2020.

The FSC said interest from consumers has been growing rapidly as well.

So far 3.15 million people are connecting with open banking.

The current services being offered are highly limited. Balances can be viewed and transfers of funds can be initiated.

“[Financial companies,] instead of competing in trying to increase their customer numbers, should be focused on improving the quality of their financial service as a low-cost highly-efficient infrastructure is being established,” FSC Chairman Eun said.

BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]