With data, Korea makes up for lost time by going all in

Industry

Published: 28 Oct. 2020, 18:24 Updated: 28 Oct. 2020, 19:18

With data, Korea makes up for lost time by going all in

Big data has been a big issue from some time, with the likes of Google controversially harvesting information from customer email and other accounts for years.

Korea has been slow to get into the game.

Standing in the way has been a set of strict rules on private information, making it difficult for private companies to utilize data of customers for business purposes.

A revision to the regulation, which came into effect in August, paved the way for the exchange of data among companies in a transparent way.

Alongside with the favorable regulatory condition, the advancement of technologies related to machine learning and cloud services supported the storage, churning out analysis of private information.

Against this backdrop, Korea’s data market was estimated to be around 1.7 trillion won ($1.5 billion) in 2019 and is expected to grow to 2.2 trillion won by 2022, according to Korea IDC.

The information is used to do everything from issue tailored recommendations to suggest travel routes.

Vice Chairman at the Financial Services Commission Sohn Byung-doo, center, and other participants celebrate the opening of Financial Data Exchange in May. [Yonhap]

Era of data exchange center

The passage of the amendment to privacy law opened an era of the data trading center, where information holders — typically financial institutions and retailers — sell an assorted set of processed data about their clients or their behavior.

The Financial Data Exchange that flung its door open in May has amassed 687 data products, whose combined transactions are worth 800 million won as of Oct. 21, according to Lim Gu-rak, head of the center.

He explained that such a data exchange center was not strictly prohibited by the law, but neither did it flourish due to a blurry line about data available for commercial use.

“Before the revision was made, the law didn’t specifically mention which information can be used without consent of the data subject,” Lim said.

“So, some companies sell their information but in a private way that requires interested users to contact data management division at a company to make a deal,” he said.

The amendment introduced the concept of pseudonymization to allow for the commercial use of data without consent from the subject if the information is properly masked.

Pseudonymization is a data management practice where additional information is required to re-identify the data subject.

A total of 87 companies, including KB Kookmin Bank, Shinhan Bank, Shinhan Card, BC Card and Naver uploaded sheets of data.

Shinhan Bank’s offerings primarily concern assets, while KB focuses on real estate market data.

Popular items include the search queries about weather conditions, sales at restaurants and delivery orders.

The center is run by the government’s Financial Security Institute, which is charged with the protection of financial information.

Korea Data Exchange is a private data trading platform run by broadcaster MBN. Launched last year, its partners include SK Telecom, LG U+, Coupang, GS Retail and CJ OliveNetworks, which operates Olive Young.

MyData on horizon

Another major pillar of the change in the big data field involves the government’s initiative called MyData to allow companies to access a wider pool of information across different companies.

A total of 35 companies — including Shinhan Bank, KB Kookmin Bank, Hana Bank, Woori Bank, Naver, Kakao and Toss — applied for the first round of preliminary approval for the MyData projects.

Banks and card companies will be able to get access to client purchase records, with the client’s consent, from online and brick-and-mortar retailors.

Tech and retail companies will obtain users' asset status from financial institutions that could serve as a critical component for listing customized recommendations or search results.

No company has yet to announce specific services aligned with the initiative, but they have offered rough outlines.

Naver said that it could fine-tune its recommendation engine to load search results on real estate properties and car insurances depending on the user’s income level or current insurance expenditure.

KB Kookmin Bank said that its MyData service will be more inclusive to serve older people with a lower understanding of the digital platform.

“We’ve set our eyes towards the customer base that would need the service most,” said Yoon Jin-soo, chief data officer at KB Kookmin Bank during a forum in June. “It is important to offer MyData service to the digitally underserved.”

Shinhan Card is aiming for a broader collection and use of data by partnering with SK Telecom and GS Retail to share data.

Hyundai Card says that it could leverage its experience of deploying data from its partnered retailors for private-label credit cards.

“In offering the branded card, card companies and partnered retailors carry out joint marketing projects based on shared data for their clients,” said a spokesperson at Hyundai Card. “So, we developed sophisticated understanding on how we can benefit from a large pool of information across the industries.”

Telecom operator KT is cooperating with Woori Financial Group to cooperate on big-data business.

Data-driven approach

Alongside with the effort to gain more consumer data across the board, different companies have taken a notable leap in incorporating advanced data analysis into their own service or business operations.

One of the major players on this front is Coupang, a leading e-commerce platform well-known for its Rocket Delivery.

The enabler of the fast shipping is an automated delivery system at its 168 distribution centers operating based on the analysis of accumulated data.

“The system is designed to have the products prepared at the distribution center within two hours of the purchase,” said a spokesperson at Coupang.

“The automated system provides identifies which center to deliver the item, an ideal route and even the location of package box at the truck,” he said.

Instead of setting up own logistics centers, discount chain Homeplus integrated a distribution center into its physical branches across the country.

Now, around 100 Homeplus stores are equipped with the in-house distribution center backed by advanced technologies, like automated checking of expiration date before being loaded. The retailer plans to increase the number to all its 140 locations by 2021.

To better deploy consumer data and examine purchase habits, some retailers are integrating scattered data into a single shopping app.

For example, Lotte launched a new app called Lotte On in April, which connects seven of the company’s retail units.

“The new app recommends products from a larger pool of a customer’s past purchases,” said Kim Jong-woo, a spokesperson at Lotte Shopping.

“Then it can present what you might like or want more accurately.”

The spokesperson added that Lotte plans to merge shopping data from offline Lotte stores into the app within this year.

“When realized, we could get an edge over other online malls,” Kim said, “because what they got is only from their online platforms. But we will process the treasure trove of data at offline stores as well as from department stores and marts to drug store LOHB’s.”

BY PARK EUN-JEE [park.eunjee@joongang.co.kr]