New system eases account shiftsMore than 23,000 people have switched the account from which they automatically pay their bills using a new online system launched by the government to stimulate competition in the stagnant banking industry.
Initiated by Financial Services Commission Chairman Yim Jong-yong, the new Change Your Account system enables anyone to shift bank accounts without having to reconnect their autopay services.
It has typically been difficult for Koreans to switch the bank account from which they automatically pay their bills - referred to here as a “main account” - because it would require an individual call to each organization connected to the account, from electricity companies to credit card firms.
Now that switch just requires a visit to www.payinfo.or.kr, a click on the “change autopay” button and a few minutes of entering information.
Starting in February, it will also be possible to use the service at local bank branches or through a bank website.
Currently, it is only possible to transfer payments associated with telecommunications, insurance and credit card companies.
Some automatic transfers designated by account holders, such as monthly rent payments, will also be able to be moved starting in February.
The policy was aimed at stimulating competition among Korea’s banks, as the authorities say they have been too lax about attracting new customers.
In response to the new service, banks are racing to figure out ways to maintain their own clients while drawing defectors from their competitors.
Woori Bank, one of the nation’s largest banks, has launched new guidelines for its sales employees, ordering them to “raise the sales of new funds and encourage [customers] to use new debit cards,” considering the fact that monthly payments on funds or debit card bills can’t be moved to new accounts at this time.
KEB Hana Bank has even issued a plastic board detailing new marketing strategies to its bankers, who are required to memorize the guidelines.
Some of the nation’s banks are also offering lucrative rewards.
Shinhan Bank announced it will give a Hyundai Avante sedan or a Spark mini car to one lucky account holder who doesn’t jump ship.
Woori Bank and Kookmin Bank also said it would offer incentives worth up to 1 million won for people who open a new account.
In some cases, the service has led to better deals for consumers.
At a KEB Hana Bank branch in Seoul on Friday, a 40-something salary worker asked a banker about what he could receive if he moved his main account. The banker proposed a lower lending rate on a loan he had received at the bank, by up to 0.3 percentage point.
“Many people inquired by phone or visiting the branch about benefits they could receive if they defect from their current banks,” said Ahn Jin-won, a banker at KEB Hana Bank.
Still, officials are cautioning that an overly hasty account transfer could lead to losses.
“If you are currently receiving benefits from your current banks, such as lower borrowing costs or commissions in return for auto payments, you could lose those benefits if you change to a new one,” said Lee Yun-su, an official at the FSC.
BY KIM HEE-JIN, KIM KYUNG-JIN [firstname.lastname@example.org]