Efficient website will make switching banks easier

Starting in September, moving a primary bank account to another bank will be easier for consumers.

Currently, when switching an account over, the bills paid through that account had to be redirected to a new account by the user by contacting each company one-by-one. But a new system provided by the Korea Financial Telecommunications and Clearings Institute (KFTC) will turn the time-consuming job into a one-click process that will transfer all the account holder’s information to the new bank.

Kim Guk-hee, a 32 year-old office worker, recently tried to open a new deposit account at the same bank as her primary account. She has banked with the institution for eight years and her salary is paid into her account there. However, the bank did not offer her any advantages on the interest rate. “I was loyal to the bank but the bank wasn’t loyal to me,” Kim complained.

Many people like Kim have been pushed into keeping all of their accounts at one bank because of the hassle of switching the bank where their main account is located.

To move a primary account, the owner must submit a correction request to each company they pay through the account, including credit card companies, mobile carriers, insurance companies and energy providers. If any mistakes occur, payments could be delayed which could damage the client’s credit rating.

However, starting in September, clients will be able to turn their back on any bank with unacceptable service due to the KFTC system.

Moving accounts will be simple. First, the client must visit the KFTC’s website, which provides information on withdrawals and transfers (www. payinfo.or.kr). Then, the user goes through an identification process using their resident registration number and verification certificate.

It is usually illegal to collect the resident registration number, but the government has made an exception for the site because the number is essential to verifying the account information.

After that, the user can see which companies have withdrawn money from his or her account.

Once registered, they can choose a new primary account that payments will be taken from as past payment information automatically moves to the new account.

The KFTC website, which ran a trial period of the service in December, will only provide withdrawal and transfer information for main accounts until the new system is implemented. Currently, the transfer information for companies is only available from 19 banks including KB Kookmin Bank, Shinhan Bank, Hana Bank, Korea Exchange Bank (KEB), Woori Bank, Industrial Bank of Korea (IBK) and Nonghyup Bank. The other financial institutions will be available on the website in May.

For now, only mobile phone bills from KT, LG U+ and SK Telecom and credit card bills from Lotte, Shinhan, Hyundai, BC, KB, Samsung, Hana, City and Nonghyup can be viewed on the KTFC website and other companies will be added in June.

“It takes time to connect the computer networks of about 80,000 companies and banks,” said Lee Yoon-soo, a director at Financial Services Commission.

“By next year, the account moving will include withdrawal from all of these companies,” he added.

He advised people who plan to switch their main account this year or early next year to go check if all of the transactions were successful because the KTFC recognized that some small companies might be missing from the website.

With the new simplified system about to take effect, the institutions are trying to attract new clients and keep their current ones by offering financial advantages such as prime rates, no commission fees and discounts at the bank’s card, securities and insurance affiliates.

Each bank is providing different benefits. Woori Bank is taking 1 percent off the loan interest rate for its clients and 0.5 percentage point more off the rate if a payment is made via the Internet or smartphone. IBK is adding 0.5 percentage point to the interest rate on its basic savings and checking account.

The new system for switching accounts is a huge opportunity for local banks. Because checking accounts cost less for banks in interest and the fluidity allows the institution to sell funds or pension insurance, local banks are ready to compete to win over account nomads.

Most clients use a checking account as the main account in which they receive their salary or pension and pay bills. And because of the low interest rate, more people are leaving money in their checking account rather than transferring it to a savings account.

According to the Bank of Korea, the total bank balance of checking accounts and savings account was 504.9 trillion won in January, an increase of 50 trillion won year-on-year.

Banks including KB Kookmin Bank, IBK, Shinhan and KEB have a separate taskforce to come up with tactics to attract debtors who are interested in moving to a new bank with appealing loans, interest rates and low commission fees.

“We want to keep our old clients and also attract new clients,” said a Woori Bank official.

BY CHO HYUN-SOOK, SHIM SAE-ROM [kim.youngshin@joongang.co.kr]